Rating Manual section 6 part 3: valuation of all property classes

Section 1115: wafer fabrications

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Scope

This section gives advice relating to the valuation of industrial facilities used for the of fabrication of semi-conductor components (silicon chips).

Whilst the processes take place in conventional industrial buildings there is a requirement for certain elements to be of highly specialised design and construction and contain specialist plant and machinery.

The main requirement of the industry is a clean air and a vibration free environment for the manufacture of silicon chips, which is many times cleaner than the standards required for hospital operating theatres.

2. List description and special category code

List description: Wafer fabrication factory and premises

SCAT code: 295, Scat suffix “S”

3. Responsible teams

3.1 The valuation and referencing of this class of property is the responsibility of the specialists within NDR Units.

3.2 The Class Co-ordination Team and Valuation Panel 3 will be available to give advice.

4. Co-ordination

The Class Co-ordination Team and the Industrial Valuation Panel have responsibility for this class ensuring effective co-ordination across the business units. Contact details are in VP and CCT Members . The team is responsible for approach, accuracy and consistency of valuations. The team will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. Caseworkers and referencers have a responsibility to:

  • follow the advice given at all times

  • not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team

  • seek advice from the co-ordination team before starting any new work

No particular legal issues with this class.

6. Survey requirements

The basis of measurement for this class is Gross Internal Area. Reference should be made to the Code of Measuring Practice for Rating Purposes in England and Wales.

Careful note should be made of the specialist features detailed as Types 1, 2, 3 and plant and machinery in Section 8 below.

7. Survey capture

Rating surveys should be captured on the Rating Support Application (RSA). Plans and surveys should be stored in appropriate folder within the Electronic Document Records Management (EDRM) system.

8. Valuation approach

Three distinct types of hereditament within this “class” have been identified.

These are:

  1. Ultra-modern main structure, purpose built, specifically designed for the process being undertaken usually within an internal self-contained clean room, possibly with a silicon cut and grind facility and very high specification floor, foundations and air conditioning.

  2. Modern design purpose built hereditaments, but of no specific design for microchips in main structure i.e. the floor and foundation construction do not have the complex and very expensive anti-vibration construction. Smaller partition framed clean room built within the main structure with some foundation enhancement.

3.Modern building but without any special main construction features. Clean room constructed within main building frame but no special floor or foundations.

It is recommended that a flexible valuation approach ought to be carried out on the Type 1 and 2 hereditaments.

Firstly a full contractors should be undertaken and then a comparison should be made with a contractors valuation produced on a typical B1/B8 property in the locality. This should identify the major cost differences. These will be considerable and can be amortised as appropriate.

Using this information rentals valuations can be undertaken and the addition for the enhancement over and above that for a B1 or B8 type hereditaments in the locality, may be identified. Reference should be made to NSU Industrial team in cases of valuation difficulty and regarding matters of rateability.

Rental comparison can be used in respect of Type 3 as this type is unlikely to have the very expensive foundation construction required for a vibration free environment. However in cases of doubt the method suggested for Type 1 and 2 hereditaments should be adopted.

Plant and Machinery

Specialist anti vibration flooring will be rateable under Class 4 Table 3 of the P & M Regs and should be valued as a separate item (the main “normal” floor will be reflected in the building price/sq.m.

Specialist plant for maintaining constant conditions (temperature, humidity, dust free) in the manufacturing facility will normally not be rateable under Class 2 as it will be used “mainly or exclusively as part of manufacturing operations” and therefore exempt from Class 2 rateability.

An uninterruptible power supply (UPS) system will normally be in place to ensure continuous manufacturing operation.

In cases of doubt on plant and machinery contact the CCT.

9. Valuation support

  • Rating Support Application (RSA)

  • Survaid

  • Class Coordination team

  • National Specialist Unit

Practice Note : 2000 : Wafer Fabrications

1. Market appraisal

In September 2015 Plessey Semiconductors announced a £60 million expansion including 400 new jobs at its Plymouth site.

RF Micro Devices who operated from premises in Newton Aycliffe merged with TriQuint on 1 January 2015 to form Qorvo. The company’s first annual report (2015) observes that the RF [ Radio Frequency] market is forecast to grow at a compound annual rate of 10% - 15% “over the next few years”. RF devices are used, in this context, in the mobile phone industry.

On 28 April 2015 German company Infineon technologies announced it would attempt to sell its Newport semiconductor plant over the next two and a half years.

Whilst there are relatively few wafer fabrication plants in the UK the evidence of investment in plants and anticipation of product market growth suggest a business sector which is in good health.

2. Changes from the last practice note

There was no 2010 List Practice Note for this class of property

3. Ratepayer discussions

There have been no discussions with ratepayers.

4. Valuation scheme

The valuation scheme remains as detailed in the Rating Manual Section.

Whilst there has been a reduction in the number of wafer fabrication plants, those that remain in occupation should continue to be valued by reference to the local industrial tone.