Global chip plant usage rate falls below 90 pct

Discussion in 'Wall St. News' started by S2007S, Nov 21, 2006.

  1. S2007S


    TOKYO, Nov 21 (Reuters) - The utilisation rate of the world's microchip plants fell to 88.6 percent in July-September and the lowest in 6 quarters, an industry group said on Tuesday, foreshadowing a slowdown in spending on chip equipment.

    Utilisation rates below 90 percent can discourage chip makers from building new factories, a negative development for chip-making equipment suppliers such as Applied Materials Inc. (AMAT.O: Quote, Profile, Research) and Tokyo Electron Ltd. (8035.T: Quote, NEWS, Research).

    The rate fell from 91.2 percent in April-June and was the lowest since 84.8 percent in the first quarter of 2005.

    It confirms that usage of chip plants peaked in the previous quarter, said Macquarie Securities analyst Yoshihiro Shimada.

    "It's hard to pinpoint a threshold where capital expenditures slow, but orders and sales seem to have peaked as well. The implication is a slowdown in spending," Shimada said.

    The usage rate remains higher than in previous downturns, on aggressive production by computer memory makers, ahead of Microsoft Corp.'s (MSFT.O: Quote, Profile, Research) launch of its new operating system Windows Vista in January, he said.

    "We expect the usage rate to bottom out in January-March at 81 percent, and then climb up to around 90 percent by the end of 2007," Shimada said.

    The data is compiled by the Semiconductor International Capacity Statistics (SICAS) group, made up of about 40 major chip makers including Intel Corp. (INTC.O: Quote, Profile, Research), Samsung Electronics Co. Ltd. (005930.KS: Quote, Profile, Research) and Texas Instruments Inc. (TXN.N: Quote, Profile, Research).

    The data comes after global chip makers cut their 2006 sales outlook to growth of 8.5 percent, down from a previously expected 10.1 percent growth, according to World Semiconductor Trade Statistics.

    Capacity for all integrated circuits rose to 1.81 million silicon wafer starts per week in July-September from 1.74 million in the previous quarter, SICAS said. Actual wafer starts, which reflect demand for chips, totalled 1.61 million a week, compared with 1.59 million in April-June.

    A wafer start is a lengthy process during which chip circuits are etched onto silicon wafers.
  2. Wafer Starts? That could become a huge monthly report number just like housing starts.