Capacity crunch seen in supply chain, warns VLSI
Silicon Strategies
10/07/2003, 8:15 PM ET
SANTA CLARA, Calif. -- Don't be surprised to see a capacity crunch in the supply chain: Fab-utilization rates across the various regions are expected to surpass the psychological 90 percent barrier in September, but chip makers are still unwilling to invest in new IC plants, according to a report from VLSI Research Inc. late today (Oct. 7, 2003).
Most regions were at or near the magical 90 percent fab-utilization barrier in August, according to VLSI Research. For years, the 90-percent figure was supposed to be a leading indicator, when chip makers would expand or invest in new chip-making plants.
So far, however, chip makers are ignoring the indicators. "What is amazing about this data is how uniformly high it is, yet the industry is pretty nonchalant about expanding at this point," said G. Dan Hutcheson, president of the market research firm in Santa Clara. "The IDMs are largely expecting the foundries to pick up the slack, but the foundries don't want a repeat of the 2000 bubble, so they are holding back."
Hutcheson warns of an imminent capacity crunch, as customers at all tiers of the supply chain are focusing on price--not supply. "It takes equipment to make real capacity and this is not happening," he said. "It is fairly safe to say that the foundries' current spending levels will not allow them to gain share."
And supply is shrinking, especially in Taiwan. The fab-capacity utilization rate in Taiwan hit 88 percent in August and is expected to reach 92 percent in September, according to VLSI Research.
The fab-capacity utilization rate in the United States was 87 percent in August and is expected to reach 90 percent in September. The fab-capacity utilization rate in Europe hit 86 percent in August and is expected to reach 90 percent in September.
The fab-capacity utilization rate in Japan was 88 percent in August and is expected to reach 90 percent in September. The fab-capacity utilization rate in Korea hit 81 percent in August and is expected to reach 89 percent in September. The fab-capacity utilization rate in the rest-of-the-world region was 86 percent in August and is expected to reach 89 percent in September.
"Taiwan was actually only 16 percent of equipment consumption in August and it is running well under the U.S. at 22 percent and Japan at 24 percent," Hutcheson said. "Other (parts of) Asia is buying 24 percent of equipment, but this is heavily laden with back-end equipment," he said.
China is not a factor at this point. "Sure, there are one to two dozen fabs on the books in China. But these are still paper tigers," he added.
History is repeating itself in the overall supply/demand picture, he concluded. "This is how our industry's crazy cycles are driven. It's not that they cannot be predicted, it's that we are driven to repeat them. Here we go again," he added. |
