May 1, 2012 -- The top three outsourced semiconductor assembly and test services (OSATS) providers raised 2012 capital expenditures (capex) during their earnings reports, from initial plans announced in January, report analysts at Citi.
To increase capacity due to mobility growth, Amkor (AMKR) raised capex from $300M to $550M; Advanced Semiconductor Engineering Incorporated (ASE) raised capex from $725M to $800M; and Siliconware Precision Industries Co. Ltd. (SPIL) raised capex from $350M to $600M. Collective, the three companies increased 2012 capex by $575M or 42% vs. January plans.
“Several of our major customers that sell into smartphones and tablets have substantially increased their demand forecasts with us and we are raising our estimate of 2012 capital additions...to meet these specific new opportunities. However, our sales and capital additions may vary depending on a number of factors including the supply of 28 nanometer wafers for some of our customers,” said Ken Joyce, Amkor's president and CEO.
All three OSATS singled out test capacity addition as the focus of higher capex, with total test capex up from $280M (in Jan plan) to $628M, or +124% from the original plan. OSATS commented that baseband and power management ICs are the main driver. Citi expects Teradyne (TER) to get a sizable share of the orders due to its 60% share in mobility.
The current capex plan for these top 3 OSATS is slightly H1 loaded, with 55% of planned capex earmarked for the first half of 2012. However,with low/unstable yield at 32/28nm fabs, and a large amount of capacity entering the market starting in Q3, there is a general concern over skyrocketing test burden in H2. Citi expects this could drive the upside in H2 of OSAT’s test capex.
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