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Semiconductor Intelligence
Posted on by Bill Jewell

Semiconductor Capacity Utilization Rising

Semiconductor Capacity Utilization Rising
by Bill Jewell on 12-18-2014 at 5:00 pm
Categories: Foundries, Semiconductor Intelligence, Semiconductor Services

Semiconductor capacity utilization (the ratio of production to capacity) appears to be on the rise, based on available data. Reliable global industry capacity data has not been available since Semiconductor Industry Capacity Statistics (SICAS) disbanded in 2011.

TSMC and UMC (the two largest pure-play foundries according to IC Insights) provide wafer shipments and wafer capacity data each quarter. Utilization is calculated by dividing the total wafer shipments by the total capacity of the two companies. This may not correspond exactly to capacity utilization due to definition and timing differences. Utilization calculated using this data exceeds 100% in some quarters. However it provides a reasonable indication of foundry utilization trends.

The U.S. Federal Reserve publishes data on capacity utilization for industries located in the U.S., regardless of the country of ownership. The names and number of companies participating in the Federal Reserve data for “Semiconductors and Related Equipment” is not available. We
can assume the Federal Reserve data is a reasonable representation of U.S. semiconductor utilization.

TSMC + UMC utilization hit a low of 35% in 1Q 2009 during the economic downturn but quickly rebounded to over 100% in 2Q 2010. Utilization slipped below 80% in 4Q 2011, but has recovered to over 100% for 2Q and 3Q 2014. U.S. utilization (based on the Federal Reserve data) hit a low of 64% in 1Q 2009 and recovered to 84% in 1Q 2011. Utilization dropped below 70% in 1Q 2012 and has been close to 70% since. So what is the overall industry trend? It is a reasonable assumption the answer lies between the TSMC + UMC and Federal Reserve data. Thus global semiconductor capacity utilization peaked at over 90% in 1Q 2011 (the last complete SICAS data), slid to 70% to 80% in 2012, and recovered to over 80% in 2014. This level of utilization implies sufficient capacity to meet near term increases in demand but high enough utilization to ensure profitable operations for semiconductor manufacturers.

The capacity utilization trend is reflected in bookings (orders) and billings (shipments) of semiconductor manufacturing equipment. SEMI and SEAJ data shows a downtrend from early 2011 to late 2012. Bookings and billings began to increase in 2013 as capacity utilization improved. Bookings and billings in 3Q 2014 are down slightly from their peaks in 4Q 2013 and 1Q 2014 respectively, but the book-to-bill ratio has been above 1.0 for the last two quarters, indicating near term growth in semiconductor equipment.

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