January 19, 2011 -- Wafer fab capex in 2011 is expected to stick around 2010 levels. But don't despair of growth, says Dean Freeman of Gartner. For one thing, cutting-edge wafer fab equipment will be hot. On top of that, 2011 will be a brief respite, with a strong 2012/2013 waiting in the wings.

Listen to Freeman's talk: Download or Play Now

Freeman, research VP at Gartner, summarizes key elements of his semiconductor industry forecast -- which he presented to attendees of SEMI's Industry Strategy Symposium (1/9-1/12/11, Half Moon Bay, CA) -- in a podcast interview with Debra Vogler, senior technical editor. Figure 1 summarizes key technology trends that Gartner believes will drive the industry.

Wafer fab equipment capex

Wafer fab equipment capex is expected to be flat in 2011 at around $54 billion -- about the same as in 2010 -- but leading edge equipment is expected to be strong. In particular, Freeman said that the 193i stepper will have "another barnburner year" in 2011 with a significant portion of capex. Following that lead would be double-patterning, polysilicon etch, and deposition equipment. Freeman made a special note of Globalfoundries announcement that it would increase its capex spending in 2011 by $2 billion (from Gartner's original forecast) as the reason Gartner increased its capex forecast.

Because the semiconductor industry is tied to gross domestic product (GDP) -- and it appears to be increasing across the board -- Freeman anticipates a good year in 2011. He sees a stronger pull from consumer demand worldwide for electronic devices (cell phones, PCs, tablets) and that bodes well for capex. "If we see a strong acceleration of the economy," noted Freeman, "we expect a 5-10% growth rate in capex." If the economy remains flat, however, Gartner expects only a flat capex for 2011. However, in 2012 and 2013, Freeman is expecting to see a strong positive capex of 10% each year. The semiconductor industry will not have a major downturn in 2011, just a slight "digestion" period before re-accelerating into 2012 and 2013 (Fig. 2).  

Figure 2. Semiconductor capital equipment, 4Q10: strength through 2013, then retrenchment. Source: Gartner.

Foundry capacity

Freeman addresses the question of whether or not foundries will have an over-capacity situation. "It appears the foundries have gone from a ‘once we get an order, we'll build capacity' back to a, ‘if we build it, they will come' mentality," said Freeman. "With three leading-edge foundries -- Samsung, TSMC, and Globalfoundries -- all capable of 28nm, all approximately at the same time, there is a much higher level of competition." As a result, Freeman observes that they all have to demonstrate to customers that they have the capacity for any one of them. So this will probably lead to a slight overbuild at 28/32nm. "It's possible you will see IDMs start to shift over sooner than expected, and that may absorb the over capacity fairly quickly." Freeman expects the over capacity will be short-lived (6 months to a year); Gartner expects 28/32nm to ramp very rapidly. Freeman cautions, however, that the foundries do not appear to be overspending from a device revenue perspective, so Gartner is monitoring the situation closely. "What a great time for a fabless company to be at the leading edge," said Freeman.

Freeman also commented on the impact of energy on the semiconductor industry. He sees a strong growth potential for analog. Green tech and automotive will also drive unique devices such as GaN on silicon and SiC devices.

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