Samsung's 1Q Spending Supports Thesis That Capex Spending Will Slow

We pointed out last week that the comments out of semiconductor manufacturers didn’t jibe with what was being said by semi equipment makers. With a few more companies having weighed in, and with the equipment industry trade group admitting it flunked statistics the last two months, everything is finally lining up the way we have been predicting. The latest evidence: Samsung spent 41 percent of memory capex in first quarter, as reported by Semiconductor Fabtech:

Samsung has said that it had spent 41 percent of planned capital spending for its memory chip division for the year in the first quarter. During a conference call with financial analysts, the company also said that DRAM memory capacity had declined due to a plan to convert some 200mm fabs to 300mm production that was now underway.

The indication that spending will be significantly less for the remainder of the year will help soak up capacity. There is good and bad news in the snippet, however. The DRAM capacity idled while the fabs are being converted helps the current capacity get more aligned with demand. However, once the conversions are completed they will have more than double the area for chip production on each wafer.

Whatever amount of capacity is idled currently isn’t helping DRAM prices any, as the chart from DRAM Exchange’s DXI indes illustrates. Yet twice as much capacity will soon come on line. As we said, we wouldn’t expect a second-half recovery in memory prices.

Comments

[Alan Brochs...:]

William, feel free to shoot me an email some time (alan@analystforhire.c... I know a little about a lot and a lot about just a little, but semiconductors and semi capital equipment is an area I would put in the latter group. It would be nice to exchange thoughts.

Regards,

Alan Brochstein

2007 Apr 16 01:29 PM