IC capacity utilization rising in 2H09 to pre-recession levels

USA: Industry-wide wafer fab capacity utilization is forecast to rise sharply in the third and fourth quarters of 2009, reaching levels not seen since 3Q08, according to data in IC Insights' recently released Mid-Year Update to The McClean Report.

As shown in Fig. 1 below, the IC capacity utilization rate hovered around 90 percent in 2007 and through the first three quarters of 2008 before the economy soured and the utilization rate plunged to 68% percent in 4Q08.

Fig. 1Source: IC Insights

According to the SICAS data, IC capacity utilization reached its low point of 57 percent in 1Q09, then rebounded 21 points to 78 percent in 2Q09 as OEMs started to replenish inventory levels. Industry capacity utilization is forecast by IC Insights to increase another 10 points to 88 percent in 3Q09—essentially the same level as a year earlier prior to the economic collapse.

IC Insights keeps a close watch on IC capacity trends as an indicator of future IC ASPs and overall IC industry strength. High utilization figures (90 percent or greater) usually indicate a strong market and rising IC ASPs, whereas declining utilization rates are often indicative of a weakening market and sometimes declining ASPs.

Though not sinking to the all-time annual low rate of 71.2 percent in 2001, IC Insights expects the average IC industry capacity rate for the entire global recession year of 2009 to drop to 77.4 percent.

Strengthening IC capacity utilization rates due to the tremendous capital spending cutbacks in 2008 and 2009 will cause IC ASPs to rebound, with annual increases of 5 percent forecast between 2010 and 2012.