Semiconductor fabs start to fill

The catastrophic slump in semiconductor sales and the consequent underuse of fabs making the chips is set to change, according to a market research company.

Isuppli said that worldwide semiconductor capacity used was only 49 percent in the first quarter of this year, but will rise to 60 percent during this quarter. Companies making semiconductors would ideally like all of their capacity to be used, or more than their capacity, because that would mean demand was very strong.

According to Len Jelinek, chief analyst of iSuppli, the chip makers have cut their workforces in the fabs already and have closed down lines that aren’t needed to service existing demand.

Isuppli believes that only 732 million square inches of silicon were fabricated in the first quarter of this year, compared to 756 million square inches in the last quarter of 2008.

The third quarter of 2009 will see 75% fab utilization, believes Jelinek, while recovery will start to show in the second quarter of next year.