Taiwan: Aggressive Investments In Equipment For 2013-2014

Spending for semiconductor equipment will remain strong as foundries compete at advanced process nodes.


By Christian Gregor Dieseldorff
Semiconductor equipment spending in 2012 declined significantly in the second half of the year as sluggish conditions in the global economy dampened some investments in the industry. Counter to this trend was spending in the Taiwan, which could come in at the $9.3 billion to $9.5 billion range. This represents $800 million more in equipment for Taiwan compared to 2011, and marks Taiwan as the largest equipment-spending region in the world.

Though semiconductor equipment sales are expected to moderate again in 2013, investments by foundries for leading-edge technology nodes and by foundries for advanced packaging remain key segments were spending is expected to remain strong. Taiwan, of course, is home to industry leading players in these segments, so Taiwan is expected to remain a top market for equipment spending this year and next.

Taiwan Semiconductor Manufacturing Company (TSMC), as Taiwan’s and the world’s leading semiconductor manufacturer, is always in the spotlight of semiconductor investment competition. Last year, following a massive investment from Intel amounting to $4.1 billion, TSMC agreed to sink money into ASML to accelerate chip manufacturing technology and also invested $339 million into research targeting the development of Extreme Ultraviolet (EUV) and 450 mm lithography tools.

In addition, TSMC also announced a capital expenditure budget of $9 billion for 2013, with growth of 8.4% from 2012 to achieve a 15% to 20% increase in revenue in 2013, which has been higher than global semiconductor average revenue growth in recent years. Also the R&D spending will increase from $1.37 billion in 2012 to $1.6 billion in 2013.

Last year, driven strong mobile chip demand, TSMC enjoyed early success of 28nm ramp up. This year, TSMC will spend $9 billion to increase its total capacity by 10% including a tripling of 28nm capacity. The 28nm process had already accounted for 22% of all TSMC wafer sales in Q4 last year and this is expected to grow to 30% this year.

In packaging, advanced form factors, such as 3D-IC and wafer-level-packaging, are focal points for new investments. These growing and emerging packaging technologies— mainly for devices consumed in mobile electronics—offer opportunities for new equipment processes and new materials development.

The overall Taiwan backend equipment market is expected to expand with the surge in demand for mobile devices. Major outsource assembly & test (OSAT) companies, such as Advanced Semiconductor Engineering (ASE) and Silicon Precision Industries (SPIL), are speeding up their advanced packaging investment in Taiwan thanks to the strong demand from communication sectors. Both ASE and SPIL indicated that their upcoming expansions were planned in view of long-term demand growth, as well as to enhance their ability to fulfill customer needs and expectations. In 2013, ASE will spend $0.6 billion to $0.7 billion, while SPIL will spend around $0.4 billion to expand their capability and R&D investment.

Taiwan is bucking the industrial downtrend by investing more to better position itself with respect to the industry’s volatility and intense competition. The increase in investment happening in Taiwan is a positive sign for the global semiconductor equipment market. The demand from Taiwan foundries and OSATs will fuel excitement for the upcoming SEMICON Taiwan 2013 (Sept. 4-6), which is expected to attract more exhibitors and visitors from around the world. The exhibition will focus on critical industry topics covering developments in lithography, 450mm, 3D-IC, substrate and advanced packaging, green manufacturing, high-brightness (HB) LEDs, MEMS, printed and flexible electronics, and other related technologies.

SEMICON Taiwan 2013 Featured Technology Pavilions
SEMICON Taiwan 2013 also offers the following technology pavilions and country pavilions that drive traffic and bring energy to the show floor:

The call-for-exhibitors is open now. Space is limited. For more information, please visit www.semicontaiwan.org.

—Christian Gregor Dieseldorff is a SEMI Industry Research & Statistics analyst.

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