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26/01/2010
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Despite suffering one of the most significant declines in the history in the first quarter of 2009, the chip making industry has been rewarded with three subsequent quarters of improved factory utilisation.
 A report from market analyst iSuppli cites the improvement as a result of conservative management of capacity, which meant many companies ended 2009 with manufacturing levels approaching those of the pre downturn levels of Q3 2008.
Len Jelinek (pictured), iSuppli's chief analyst for semiconductor manufacturing, said: "Throughout 2009, the uncertainty of global economics dictated how semiconductor companies managed operations. It was not until late in the fourth quarter of 2009 that companies became willing to make decisions that had implications focused on expansion."
According to Jelinek, there are numerous indicators that support a much more positive outlook for manufacturing run rates in 2010.
He continued: "Innovative new products and a conservative approach to inventory levels throughout the supply chain are probably the two key indicators that are spurring optimism among manufacturers."
iSuppli anticipates that manufacturing run rates in the second half of 2010 will drive total factory utilisations into the high 80s to low 90s for most companies. For advanced semiconductor manufacturing processes and memory technologies, factory utilisations will be in excess of 90% and will approach 100% by year end.
Jelinek concluded: "With significantly increased levels of manufacturing, companies will be forced to expand manufacturing. This will reverse the recent three year decline in capital expenditures that the equipment companies have been forced to manage. iSuppli anticipates that global capital expenditures will increase by 46.8% year over year."
iSuppli predicts that the largest year over year increase in capital will be for the manufacturing of memory products – an increase of 65.5% according to the analyst.
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Author
Chris Shaw
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