Bigger Disks to Double Fab Spending: Report

If the crystal ball is as clear as soothsayers say it is, the semiconductor manufacturing market is poised for a Renaissance of sorts in the next 12 to 18 months.

New stats published Wednesday by Strategic Marketing Associates say fab construction spending will hit $1.2 billion, or more than double by the third quarter of next year and things should really get rolling in the next six months.

The cause celeb? 300-millimeter wafers.

Manufacturing with 300mm wafers (about 12 inches in diameter) dramatically increases the ability to produce semiconductors at a lower cost compared with the current standard 200mm (eight-inch) wafers. The total silicon surface area of a 300mm wafer is 225 percent (or more than twice) that of a 200mm wafer, and the number of printed die (individual computer chips) is increased to 240 percent. The thinking is that bigger wafers lower the production cost per chip while diminishing overall use of resources. Industry experts say wafers built using 300mm technology will use 40 percent less energy and water per chip than that of a 200mm wafer.

Using 300mm is all the rage with major players leading the way. IBM , for example, has a new 300mm chip fab in East Fishkill, N.Y.; Intel is in the middle of converting its 200mm wafer plant in Chandler, Arizona to 300mm and Texas Instruments just announced it will build a $3 billion fab in Richardson, Texas. Other top-tier chipmakers working in the 300mm space include: Taiwan Semiconductor Manufacturing , STMicroelectronics , Philips and Motorola .

The Santa Cruz, Calif.-based firm’s quarterly report — Fab Construction Monitor — focused on construction activity, and benchmark dates such as equipment move-in. A separate report, FabExpenditures: The Next Twelve Months, which tracks more than 120 fabs over five quarters, says overall expenditures will also begin increasing this quarter and continue growing through Q3 of 2004.

The report, which includes equipment spending at sixty 300mm fabs over the next five quarters, shows spending for these fabs will grow from $2.4 billion in the second quarter of this year to more than $5 billion by the third quarter of 2004. Not only will new 300mm fabs begin to ramp production and existing ones add equipment, but new 300mm fabs will be built as well. The report says as many as ten more could start construction by the end of the third quarter of 2004.

“It’s both capacity and technology,” said Strategic Marketing president George Burns. “Companies must remain competitive and that means investments in 300mm wafers and smaller chip geometries. We expect that as many as 45 fabs will be 90nm-capable fabs by this time next year. That’s going to power the recovery in equipment spending.”

The reports also highlight the revival of Japanese manufacturing prowess: several Japanese fabs have begun adding equipment for increased 300mm production or begun construction of new 300mm fabs. These include Elpida, Toshiba, Trecenti and Sony.

“Roughly half the spending will take place in Asia Pacific. Europe, Japan and the U.S. will continue to outspend Asia Pacific for leading-edge 300mm equipment, but not by much,” Burns said. “Asia Pacific is coming on. Forty-five percent of 300mm equipment spending will occur in Asia Pacific, a place that not too long ago was called ROW.”

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