Future Horizons Expects IC Manufacturing Capacity Utilization to Rise

6/25/2004 - Integrated circuit manufacturing capacity utilisation reached 93.4 per cent in Q1-2004 versus 91.9 per cent in Q4-2003 according to Future Horizons, Europe's leading semiconductor analyst.

Q1-2004 wafer fab capacity was the same as in Q4-2003 at almost 1.3 million 200mm equivalent wafer starts per week, up almost 10 per cent on Q1-2003 according to the Future Horizons Semiconductor Monthly Update Report. But in contrast, integrated circuit sales increased 32.3 per cent in the same timeframe, equivalent to more than three times the rate of fab capacity increase.

"Industry utilisation is climbing steadily, but sales are climbing faster. No amount of die shrinking, yield, or productivity improvements can reconcile these two radically different growth rates. Capacity is set to be tight through 2004 and well into 2005," said Malcolm Penn, CEO, Future Horizons.

Industry invested around US$30 billion in new fab capacity in 2003, or 18.0 per cent of sales, its lowest investment level since 1986-87, with the majority of investment dollars targeted at technology enhancements, not for increased wafer volumes.

According to Future Horizons, investment estimates for 2004 are some 60 per cent higher at around US$50 billion dollar. Investment is currently tempered by post fourth quarter caution and the inability of the equipment firms to deliver kit faster.

Unlike 2003, almost all of 2004's investment is being targeted at increased wafer production, and would be the equivalent of around 25 leading-edge fabs with a full production capability of 180k 200mm equivalent wafer starts per week. This represents a 14 per cent increase in overall fab capacity, once the plants are fully installed.

With the bulk of the equipment deliveries not starting until the second half of 2004, it will not be until the first half of Q2-2005 that plant starts to produce the first qualified saleable silicon, and the first half of 2006 before it ramps to full output capacity.

The Future Horizons Semiconductor Monthly Update Report is published monthly and available from Future Horizons priced at £1,000 for a single user annual license or £2,200 for a multi-user intranet version.

About Future Horizons
Future Horizons, founded in 1989, is Europe's leading semiconductor analyst. It provides market research and business support services for use in opportunity analysis, business planning and new market development. Its industry information seminars and Forums are widely considered to be the best of their kind. Future Horizons publishes a series of monthly, half-yearly and annual market reports, with emphasis is placed on the worldwide microelectronics and electronics industry and the European market environment. See www.futurehorizons.com for further information.

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