Semi industry fab costs limit industry growth

Semi industry fab costs limit industry growth

MANHASSET, NY -- In its latest report market research firm Gartner states that the fundamental economics of the semiconductor industry may start changing sooner rather than later and that rising costs are a permanent part of the industry.

The costs of staying at the leading edge in semiconductor manufacturing are rising with semiconductor manufacturers needing to plan on equipment costs increasing at about 15 percent for each new node.

While it's possible that 450 mm manufacturing will achieve its stated goals of a 30 percent cost reduction, that represents about only three or four years of increasing equipment costs, and consequently, delays the inevitable. It is also possible that new technologies will emerge that will slow the rate of cost increases.

Key findings in the report include that costs of manufacturing equipment needed for leading-edge semiconductor manufacturing are increasing at a rate between 7 percent and 10 percent per year, depending on the basic process.

By 2020, current cost trends will lead to an average cost of between $15 billion and $20 billion for a leading-edge fab. By 2016, the minimum capital expenditure (capex) budget needed to justify the building of a new fab will range from $8 billion to $10 billion for logic, $3.5 billion to $4.5 billion for DRAM and $6 billion to $7 billion for NAND flash.

Gartner report predicts that at current spending rates, only eight companies could afford to build fabs in the next few years.

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TAG:Semiconductor Industry Fab