On the Plane at Samsung
As we have noted, the semiconductor capacity shortage being faced this year has incentivized foundries to increase both short-term and long-term capex, however given that there are only a limited number of key semiconductor tool vendors, all increases in construction cap\ex must be followed by spending for semiconductor equipment, which can have lead times extending to 12+ months. Tool vendors must be careful not to over promise on delivery dates, which will leave foundries with incomplete fabs, but also face their own limitations on production capabilities.
In order to make sure that there is not a gap between construction and equipment move in, semiconductor manufacturers must work themselves into equipment queues at a number of tool vendors, and during periods of high capital spending in the semi space, this can become contentious. While constant contact between potential semiconductor producers and equipment vendors is normally expected, when executives get on planes to make visible visits to tool vendors, it tends to indicate the level of competition for tool vendor capacity.
It seems that Samsung executives have been on planes this week, making appearances at Applied Materials (AMAT) and Lam Research (LRCX) after a trip to ASML (ASML) recently. In fact the Vice Chairman of Samsung Electronics made an unusual and highly visible to ASML last October to maintain a smooth relationship between the companies, given ASML is the only supplier of EUV equipment necessary for production at 5nm and below. With announcements of new or increased capex spending by Samsung, TSM, and Intel, we expect lots of miles will be flown by managements to keep tool vendors from reallocating resources. While TSM as the largest foundry has a well-established relationship with primary tool vendors, we give Samsung credit for being an early capex ‘announcer’ and shaking the hands (metaphorically) of tool vendors as others are just announcing and formulating long-term spending plans.
In order to make sure that there is not a gap between construction and equipment move in, semiconductor manufacturers must work themselves into equipment queues at a number of tool vendors, and during periods of high capital spending in the semi space, this can become contentious. While constant contact between potential semiconductor producers and equipment vendors is normally expected, when executives get on planes to make visible visits to tool vendors, it tends to indicate the level of competition for tool vendor capacity.
It seems that Samsung executives have been on planes this week, making appearances at Applied Materials (AMAT) and Lam Research (LRCX) after a trip to ASML (ASML) recently. In fact the Vice Chairman of Samsung Electronics made an unusual and highly visible to ASML last October to maintain a smooth relationship between the companies, given ASML is the only supplier of EUV equipment necessary for production at 5nm and below. With announcements of new or increased capex spending by Samsung, TSM, and Intel, we expect lots of miles will be flown by managements to keep tool vendors from reallocating resources. While TSM as the largest foundry has a well-established relationship with primary tool vendors, we give Samsung credit for being an early capex ‘announcer’ and shaking the hands (metaphorically) of tool vendors as others are just announcing and formulating long-term spending plans.
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