Supply Chain Management

Semiconductor Capacity Growth Rate Slows

16 January 2014

Semiconductor suppliers will increase chip capacity in 2014 and 2015, but at slower growth rates than in previous years, according to a new report by fab tool vendor trade association Semiconductor Equipment and Materials International (SEMI).

Worldwide semiconductor capacity is expected to increase 4 percent in 2014 and 6 percent in 2015, said SEMI. However, the annual growth rate of new capacity increased from 6 percent in 2003 to 20 percent in 2007, and fab capacity nearly doubled during that period, according to the SEMI World Fab Forecast. The increase was driven primarily by DRAM and NAND companies in Korea, Taiwan and China.

After 2009, while fab equipment spending recovered, new capacity additions dropped from 7 percent in 2010 to about 4 percent in 2014, with an expected capacity addition of only 17 percent in the five years from 2009 to 2014, the association said.

Since 2009, capital expenditures on upgrading existing equipment have grown sharply. Expansion projects, such as new fabs, still account for the majority of fab equipment spending but are in lower proportions than in the past. Costs for adding new equipment to a new facility are typically higher than upgrading some of the existing equipment, according to SEMI.

The two industry segments that are expected to add the most capacity in 2014 are foundries and NAND flash. Dedicated foundry capacity grew 10 percent in 2013 and will grow another 8 to 10 percent in 2014, the SEMI report said. For NAND flash, which lost about 4 percent of capacity in 2012, capacity rose 10 percent in 2013 and will grow another 5 to 8 percent in 2014.

Other segments, such as DRAM, analog and logic, are not expected to add any new capacity in 2014, while some capacity will be added for microprocessors, SEMI said.

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