Knometa Research does not expect near-term wafer fab expansion to lead to a market downturn in 2024. This is at odds with other analysts.
Knometa’s Global Wafer Capacity 2022 report makes the case that while fab expansion plans are certainly aggressive and could lead to some downward pricing pressure in 2024 it is unlikely to lead to multiple fabs sitting with idle capacity.
In 2021, IC manufacturers responded to widespread shortages by increasing capacity 8.6 percent. For 2022, an 8.7 percent expansion of capacity is expected, followed by 8.2% percent growth in 2023.
Capital spending for fabs and equipment, expressed as a percent of semiconductor revenue, was at 25 percent in 2021, the highest rate since 2001 when the ratio was 26 percent.
In the past, very high spending-to-sales ratios usually indicated too much capacity was being added and a market correction was coming soon. In 2001, capacity utilization rates tumbled sharply from 2000 when chip demand crashed. However, in contrast to 2001, unit shipments in 2021 were very strong, resulting in a high overall chip manufacturing capacity utilization rate of nearly 94 percent.
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