IC Insights lowers 2008 semiconductor capex expectations

Don your helmets, because cuts to capital spending have put the IC industry on a "collision course," according to the latest data from researchers at IC Insights.
According to the company, current spending plans by IC manufacturers worldwide will lower total semiconductor capital expenditures by 15% to $51.7 billion in 2008 from $60.9 billion in 2007. Capital expenditure estimates for 2008 have been sliding since the end of 2007, with projections in December calling for a 9% dip.

Overall, IC Insights expects fab capacity utilization to average more than 90% in 2008, up from 89% in 2007. In the first half, wafer fab utilization stood at 91% worldwide.
However, IC Insights noted that 300mm fab utilization rates were at an extremely high level of 96% in the first half and pointed out that about 85% of all DRAMs and 32- and 64-bit microprocessors are now fabricated on 300mm diameter wafers.
"Considering the strong unit growth rates being seen in memory and logic ICs, there simply isn't much wiggle room for additional cuts in capital spending budgets at most chipmakers, based on the latest analysis from IC Insights' online Strategic Reviews database of semiconductor suppliers," the company said in a statement today.

IC Insights said that based on its data it expects 2008 capital spending as a percentage of semiconductor sales to be only 18%, which would be one of the lowest ratios over the past 30 years. The company further pointed out that the capital spending cutbacks are occurring while IC unit volume shipments are forecast to increase at a healthy 8% rate in 2008.