SAN JOSE – SEMI forecasts 8% annual growth in installed fab capacity for 2010, at least another 8% for 2011, and at least 9% for 2012.

Japan will maintain its leadership with more than 23% share, followed closely by Korea and Taiwan with nearly 20% each. Japan is expected to lose some minor share of capacity (in single digits) in the next couple of years, while Korea will maintain steady growth of about 20%.

The top five companies contributing to China’s increased share by 2012 are SMIC, Intel, TSMC, Hua Li and Promos.

Fab spending is expected to increase 18.3% in 2011 and 9.5% in 2012, as a result of ongoing technology upgrades and continued capacity growth, especially for memory, foundries and MPU, says the firm.

Spending on fab equipment is forecast to rise 23%, reaching about $40 billion in 2011, surpassing spending levels of 2007. Without discrete fabs, equipment spending is expected to grow 23.6%, reaching about $37.5B in 2011.

For 2010, the industry segment with the most growth in equipment spending will be memory, followed by foundries. This will change in 2011: Foundries are expected to grow by more than 30%, while memory will rise only 20%.

The next largest growth segment is MPU, with about 33% in 2010, about 15% in 2011, and about 30% projected for 2012.

For 2011, equipment spending for upgrades maintains steady growth of more than 60%. However, spending for capacity expansions is expected to be much lower (about 9%).

A sharp decline in new fabs being built – even ignoring LED fabs – in 2011 and 2012 raises concerns for the industry, says SEMI. The current focus is on upgrading and ramping existing facilities. The industry may not have enough capacity in the next two years, as new fabs slowly come online.

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