Global spending on equipment used in the manufacture of semiconductors is expected to remain strong next year, despite several local chipmakers' decision to put capacity expansion plans on hold after weathering the inventory corrosion phase, a supplier said yesterday.
"Some semiconductor manu-facturers are turning cautious about capacity buildup, and they are taking precautions to avert oversupply," said Erix Yu (余定陸), a vice president of Applied Materials Inc's Taiwan affiliate.
"But that is not an industry-wide phenomenon. At least, we haven't seen any request from our customers to push back their equipment delivery schedule, or postpone orders," Yu said.
Despite concerns over excess chip inventory, semiconductor-equipment expenditures are likely to remain unchanged next year, he said.
Semiconductor manufacturers worldwide are expected to spend US$36.16 billion on new facilities this year, up from US$22.19 billion last year, according to a forecast made by Semiconductor Equipment and Materials International in July.
Inventory in the supply chain climbed to a 9-quarter high of 65 days in the quarter to June, but Yu said that still fell in an acceptable range, compared with over 80 days during the previous period of semiconductor oversupply in 2000.
"Of course, we'll closely monitor how much Christmas demand will help digest the inventory, but we're not too worried," Yu said, adding that his company still expected the industry to regain momentum after the inventory correction has been completed.
The Santa Clara-based company supplies semiconductor equipment to numerous industry leaders, including the world's largest two contract chipmakers, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電).
"Clearly the industry slowed down in August, but we believe this is a correction period rather than the beginning of a downturn," research house VLSI Research Inc said in its latest report.
The book-to-bill ratio of global semiconductor equipment suppliers dropped below parity level to 0.94 last month, a figure which has not been seen since last August, VLSI said on Friday.
Still, concern over a glut intensified as fresh worries surfaced that prolonged inventory problems could drag down chipmakers' factory utilization and cause further scale-backs in new equipment outlay, analysts said yesterday.
"There's slim likelihood that the global semiconductor companies will increase spending on new facilities when the industry is heading to its next downturn," said Charlie Chen (陳思旭), a semiconductor analyst with Grand Cathay Securities Co (大華證券).
Chen said that TSMC's and UMC's factory utilization could drop to 90 percent in the final quarter, from 100 percent over the past few quarters.
TSMC could maintain its pace by boosting capacity and may keep capital spending unchanged at the company's initial estimate of US$2.4 billion, but smaller rival UMC will certainly trim expenditures to avoid a drop in its utilization rate, Chen said.
UMC almost tripled its capital expenditures this year to US$2.2 billion from US$740 million last year.
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