Market research firm IC Insights believes that record capital spending in the foundry sector by some of the key players could lead to overcapacity in 2012. In the latest IC Insights, McClean Report it was noted that foundry CapEx in 2010 and 2011 is expected to be only 5% less than the foundry spending in the five-year period of 2005-2009.
Key spenders are TSMC and GlobalFoundries with plans this year to spend US$7.8 billion and US$5.4 billion, respectively. Samsung Electronics is also a relatively big spender in 2011 with plans of US$9.2 billion in total, which includes a major upgrade to an existing fab or a brand new fab for foundry services.
Collectively, capital spending among IC foundry players (pure-play and IDM foundries) is expected to grow 43% in 2011 to US$19.7 billion, up from US$13.8 billion in 2010, which was a 146% increase over 2009.
However, IC Insights acknowledges that the increased spending was necessary, due to the significant under-spending in 2008 and 2009 and the need to meet continued demand from IC manufacturers continuing to move to the fab-lite/fabless business model.
IC Insights believes that should spending at high levels continue into 2012, the foundry industry is highly likely to enter a period of overcapacity before the end of next year.