Fab Equipment Spending Remains Flat in 2013; Up 24% in
Semiconductor industry investments coast with caution through 2013, accelerating in 2014
By Christian Gregor Dieseldorff, SEMI Industry Research & Statistics Group (March 3, 2013)
Fab equipment spending for Front End facilities is expected to hover around flat in 2013 and with an increase of 24 percent in 2014 (See Table 1). The SEMI World Fab Forecast, published at the end of February, reveals little has changed from the projections published at the end of November when the report was last issued. The report tracks equipment spending at over 180 facilities in 2013.
At the time of the November 2012 publication, semiconductor companies had not announced their capex plans for 2013, so fab spending predictions were based on extensive modeling. More than 262 updates have been made since the last publication and are based on announced spending plans, including major changes for TSMC, Samsung, Intel, SK Hynix, Globalfoundries , UMC, and for some Japanese facilities and LED facilities. Despite these adjustments, the overall forecast for equipment spending for 2013 has remained about the same. Depending on macro-economic risk factors, possible scenarios project a range of -3 percent to +3 percent change rate for fab equipment spending in 2013; in other words, hovering around flat.
Global chip sales have started on a bright note in 2013, as the SIA reports that three-month average for global chip sales for January increased 3.8 percent above January 2012. It also appears that the average sentiment for revenue growth is in the upper single digits in 2013, about 7 percent YoY, compared to about -3 percent in 2012.
Though the overall outlook has improved some, fewer players in the market can afford the rising costs for R&D and upgrading facilities as the amount of money needed to upgrade facilities at the leading edge technologies is immense. The World Fab Forecast report shows increases for fab equipment spending, varying by technology node (See Figure 1). Fab equipment spending for 17nm and below is expected to kick off in 2013 and increase by a factor of 2.4 to about $25 billion from 2013 to 2014.
Fab construction spending is now expected to increase more than previously predicted. Back in November 2012, a change of 3.7 percent YoY was forecasted; now, 6.7 percent growth is forecasted with construction spending to reach almost US$6 billion. In 2014, however, construction project spending is expected to contract by about 18 percent. Construction spending is led, far and away, by TSMC, with seven different projects for the year; followed by Intel with projects including D1X module 2, Fab 42 and some other sites. Fab construction spending in China will increase by a factor of four because of Samsung’s Mega fab in Xian.
Since the 2008/2009 economic downturn, the industry has been adding capacity more slowly than ever, as reflected in SEMI’s World Fab Forecast data. Capacity is now forecasted to expand by just 2.8 percent for this year, and to improve to 5.4 percent growth in 2014. See Figure 2.
Excluding 2009, the years 2012 and 2013 show the lowest growth rate for new capacity over that past ten years. The World Fab Forecast gives detailed capacity information by industry segment and by individual company and fab. Dedicated foundries are expected to add 10 to 11 percent more capacity in 2013 and 2014. Flash will add 4 percent new capacity in 2013 and about 10 percent in 2014. New capacity expansions for the System LSI segment should drop from the double digits of previous years to single digits in 2013 and 2014.
We believe that there will be a pent-up demand for some product types because capacity additions have been cut to a minimum level while chip demand keeps increasing. Capacity additions and equipment spending are expected to pick up in the second half of 2013. In 2014, at least 5 percent in new capacity will be added and fab equipment spending will increase by 24 percent. From now on until our next update the end of May 2013, our team around the world is expected to learn more details about planning at key companies in 2013 which will be reflected in our next edition. Stay tuned!
SEMI Industry Research and Statistics Group: a Worldwide Dedicated Team
Since the last fab database publication at the end November 2012 SEMI’s worldwide dedicated analysis team has made 262 updates to more than 210 facilities (including Opto/LED fabs) in the database. The latest edition of the World Fab Forecast lists 1,146 facilities (including 310 Opto/LED facilities), with 58 facilities starting production this year and in the near future.
The SEMI World Fab Forecast uses a bottom-up approach methodology, providing high-level summaries and graphs; and in-depth analyses of capital expenditures, capacities, technology and products by fab. Additionally, the database provides forecasts for the next 18 months by quarter. These tools are invaluable for understanding how the semiconductor manufacturing will look in 2013 and 2014, and learning more about capex for construction projects, fab equipping, technology levels, and products.
SEMI’s Worldwide Semiconductor Equipment Market Subscription (WWSEMS) data tracks only new equipment for fabs and test and assembly and packaging houses. The SEMI World Fab Forecast and its related Fab Database reports track any equipment needed to ramp fabs, upgrade technology nodes, and expand or change wafer size, including new equipment, used equipment, or in-house equipment.
Also check out the Opto/LED Fab Forecast.
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March 3, 2013