Japan Continues to Spend Big on Semiconductor Equipment


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Japan Continues to Spend Big on Semiconductor Equipment

by Dan Tracy, Lara Chamness, and Edwin Hall, SEMI Industry Research and Statistics

Japan’s economy is rebounding from difficulties in the late nineties and the early 2000s. According to the Economist, the short-term outlook remains favorable, with real GDP growth forecast at 2.3% in 2007 and averaging 2 percent a year over the next several years. Also, electronic manufacturers in Japan continue to innovate and develop technologies that ever increase the functionality of portable electronic devices.

On the semiconductor equipment front, Japan has been the spending leader for the last five years. The country spent about $31 billion on new equipment from 2003 through 2006, which represents almost a quarter of the world total of $133 billion spent on equipment over the same time period. According to the 2007 Year-End consensus forecast published this month, Japan will spend $8.9B in 2008 and $9.5B in 2009, which means the region will continue to be one of the “biggest spenders.”

Japan’s growth also continues in semiconductor materials, particularly wafer fabrication materials, which are forecasted to grow about 14 percent from about $6.0 billion this year to $6.8 billion in 2009.

Investment in 300 mm technologies is the primary driver behind this spending. As of October 2007, there were seventeen 300 mm volume fabs and another two under construction—with Flash Alliance sharing most of the construction spending in Japan. According to the Fab Capacity Report (October 2007 edition), the 300 mm capacity in this region is expected to increase by about 58 percent from 272,000 wafers per month (wpm) last year to over 429,000 wpm by year end. The capacity is expected to increase to 571,200 wpm by the end of 2008.

Source: Fab Capacity Report, October 2007

In addition to 300 mm wafer fabrication, Japan remains a key region for investment in final manufacturing. Device manufacturers in Japan spent an estimated $6.2 billion on test and assembly and packaging equipment from 2003 through 2006. While many semiconductor manufacturers in Japan have relocated plants to China that assemble and test traditional leadframe-type packages, much of the advanced packaging and test manufacturing remains on-shore.

Equipment spending by other regions in the Asia-Pacific justifiably attracts much of the industry’s attention regarding manufacturing investments, especially for memory device production and foundry capacity. Despite this, Japan continues to be one of the leaders in terms of equipment spending. It will remain the regional heavyweight with the largest installed fab capacity for at least the next few years.

Portions of this article were derived from the SEMI Fab Capacity Report, Equipment Market Data Subscription (EMDS), and the Material Market Data Subscription (MMDS). These reports are essential business tools for any company keeping track of the semiconductor equipment and material market in Japan. For additional information regarding this report and other market research reports, visit www.semi.org/marketinfo. For questions, please contact either Dan Tracy (dtracy@semi.org) or Lara Chamness (lchamness@semi.org). If you would like a brochure or a sample of any of these reports, please contact Edwin Hall (ehall@semi.org).

December 3, 2007