Intel and Samsung spend to make themselves different

Intel and Samsung are spending a small fortune to make themselves look different from their rivals.

According to a report by market research firm IC Insights,  the pair have made some aggressive 2012 capital spending plans.

Intel has said it plans to spend roughly $12.5 billion on capital expenditure while Samsung wants to spend $12.2 billion.

Both are expected to more than double the 2012 capital expenditures of Taiwan Semiconductor Manufacturing which is the third biggest spender. TSMC has been talking about how it will spend $6 billion on new capital.

IC Insights said the three were becoming more dominant in their areas of specialisation and that smaller competitors may soon find it extremely challenging to remain competitive in developing new products or competing.

It predicts that weaker suppliers will be forced out of the business and a “higher percentage of capex spending will be in the hands of the fewer remaining players,” IC Insights said.

The big three have been paying out shedloads since 2009. In 2010, TSMC doubled its capital spending compared to 2009, while Samsung tripled its semiconductor capex spending, IC Insights said. In 2011, Intel doubled its capex compared to 2010.

Samsung wants to spend to support its logic ICs, more than it is planning to spend on memory. The report notes Samsung currently does lucrative business as the foundry for Apple’s A4 and A5 chips. The only way to stop Apple’s business going to TSMC is to improve things for Cupertino.

“Samsung is demonstrating that it has the means to provide all the process and manufacturing muscle needed when Apple considers a foundry partner to build its next-generation processors,” IC Insights said in the report.

Intel is nearing completion of its fabs in Chandler, Arizona, Hillsboro, Oregon and Ireland and would soon be equipping them and ramping production. Several of Intel’s existing fabs will also begin production of 22-nm processors in the second half of 2012, IC Insights said.

But the analyst firm thinks that Intel wants to expand its processor presence in the market for smartphones and media devices and this will require a lot more cash.