With more plants being moth-balled, IC makers cut their total capacity to 1.28 million eight-inch equivalent wafer starts per week in Q4 vs. 1.32 million in Q3, based on the Semiconductor International Capacity Statistics (SICAS) report released recently by the SIA. The report shows the industry's wafer-processing capacity dropping for the first time since the start of 2001. The third quarter's 1.32 million wafer starts per week was an all-time high.

IC wafer-processing capacity sequentially dropped in all categories during the fourth quarter, except for MOS process technology with feature sizes below 0.2 micron. Wafer-processing capacity in the most advanced IC fabs grew by 2.7% to 325,800 eight-inch equivalent wafer starts per week in Q4 vs. 317,200 in Q3, the SICAS report said.

While the total capacity for IC processing slipped in Q4, the utilization rate of fabs nudged up to 65.9% for MOS and bipolar plants compared to 64.2% in Q3, the report said. MOS integrated circuit fabs were operating at 66.1% of their capacity in Q4, while bipolar IC front-end lines were running at 63.7% of capacity, the report said.

In the leading-edge sub-0.2-micron MOS category, fab utilization increased to 83.5% across the industry compared to 79% in Q3. Fab utilization in the leading-edge MOS technologies had hit 83.7% in the second quarter of 2001 before slipped in the next three-month period.

The drop in total IC production capacity and the slight increase in utilization can be linked to chip makers aggressively closing older and obsolete fabs, said IC Insights Inc. in Scottsdale, Ariz. The research firm said it is now projecting a 22% decline in semiconductor industry capital spending in 2002 to about $29 billion compared to investments last year.

In its March newsletter issued this week, IC Insights said wafer processing capacity at the pure-play foundry companies will decrease on a year-to-year comparison for the first time in 2002. The pure-play foundry capacity is expected to decline 1% in 2002 vs. an original projection of a 20% growth, noted IC Insights.

"Given the extensive elimination of older capacity (instead of adding new capacity) by the 'Big 3' pure-play foundries [TSMC, UMC and Chartered Semiconductor], capacity utilization figures for these companies could improve significantly in 2002 as compared to 2001," said the March 2002 Update newsletter from IC Insights. "However, the aggressive capacity addition plans still in place for the startup foundries will moderate the overall increase in the total pure-play foundry utilization numbers," the research firm added.

Earlier this month, Taiwan Semiconductor Manufacturing Co. Ltd. and United Microelectronics Corp. told a financial investors conference in Taipei that they expected to see fab utilization rates grow to around 55-to-60% in the first quarter after falling well below the 50% range in the 2001 downturn (see March 13 story).

--J. Robert Lineback