More Fabs Seen In Chip Boom
June 17, 2021
Over the last year, the semiconductor industry has seen an amazing turnaround.
The industry happens to be in a boom cycle. Today, chip demand remains strong. And some fab projects have been accelerated to meet this demand, according to Christian Dieseldorff, an analyst at SEMI.
It wasn’t always this way. In early 2020, the business looked bright, but the IC market dropped amid the Covid-19 pandemic outbreak. Throughout 2020, different countries implemented a number of measures to mitigate the outbreak, such as stay-at-home orders and business closures. Economic turmoil and job losses soon followed.
But by mid-2020, the IC market bounced back, as the stay-at-home economy drove demand for computers, tablets, and TVs. That momentum has carried over into the first part of 2021. Chip demand has skyrocketed. And chip shortages also surfaced, especially in automotive as well as the mobile and PC markets.
All of this has caught the attention of various governments, especially those in the China, European Union, Japan, Korea and the United States. For the first time, many nations realized the importance of the semiconductor industry. It’s the heart of all electronic products and provides an engine of growth for many nations.
But there’s still a lack of understanding here, at least among some. They wonder why chipmakers simply can’t build fabs in a day to keep up with booming demand. It doesn’t work that way. It takes anywhere from one to two years to build a large-scale fab. The initial price tag for a state-of-the-art 300mm fab is around $10 billion. A large percentage of the cost is the equipment.
Plus, chipmakers don’t build fabs on a whim. They need to keep the fabs full to make money. There’s a lot of planning and forecasting that takes place among chipmakers and their customers.
Nonetheless, with the current chip shortages, will the industry build more fabs to meet demand? And will the industry accelerate the current fab projects on the drawing board? “Yes, that is somewhat the case,” SEMI’s Dieseldorff said. “Most of the fab projects were already known in 2020. Some fab projects seem to be accelerated. This also has to do with government incentives in the U.S. and Europe.”
Building new fabs is only half the battle today. Finding enough equipment is the other challenge. “One problem we see is that some companies like TSMC and Samsung have increased their capex to historic high levels with huge demand for equipment. This has caused a bottleneck with an increase of lead times for equipment,” Dieseldorff said.
Nonetheless, the industry is expected to build more fabs over time, including both 200mm and 300mm facilities. 200mm fabs are used to build chips using more mature processes. 300mm fabs are used to build both mature and leading-edge chips. SEMI’s definition of a fab is a production facility, not an R&D or pilot line.
In total, the number of 200mm fabs is expected to increase from 212 in 2020 to 222 in 2022, according to SEMI. In comparison, the number of 300mm fabs is expected to increase from 129 in 2020 to 149 in 2022, according to SEMI.
There are fewer 300mm fabs, but they require newer and more expensive equipment. As a result, fab equipment spending in the 300mm market is expected to grow from $78 billion in 2021 to $88 billion in 2022, according to the trade group.
After years of sizzling growth, the 200mm equipment market is slowing. Fab equipment spending in 200mm is expected to decline from $4.6 billion in 2021 to $4 billion in 2022, they added.
According to SEMI, here’s just a few of the new fab projects in the works:
TSMC—300mm (Arizona); TI-300mm (Texas); Intel-300mm (Arizona); Cree–200mm (New York).
SMIC—300mm (Beijing); YMTC—300mm (Wuhan).
Kioxia/WD 300mm (Yokkaichi)
Samsung P3 300mm (Pyeongtaek)
TSMC Fab 18, phase 4,5,6 (Tainan)
What does this all mean? Semis are critical and will remain a hot market for some time. Just how long the boom cycle will last is the big question.