Fab Equipment Spending Expected to Improve with 2% in 2013
Strong 2nd half pulls 2013 finally into positive territory, 2014 growth in double digits
By Christian Gregor Dieseldorff, SEMI Industry Research & Statistics Group (June 3, 2013)
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Fab equipment spending will grow two percent year-over-year (US$ 32.5 billion) for 2013 and 23 to 27 percent in 2014 ($41 billion) according to the May edition of the SEMI World Fab Forecast. Fab construction spending, which can be a strong indicator for future equipment spending, is expected to grow 6.5 percent ($6.6 billion) in 2013, followed by a decline of 18 percent ($5.4 billion) in 2014. The new World Fab Forecast report covers fab information on over 1,100 facilities, including such details as capacities, technology nodes, product types, and spending for construction and equipment for any cleanroom wafer facility by quarter. Reported spending reported includes new, used and in-house equipment for volume fabs to R&D, for product types such as IC facilities, Discretes, and LEDs.
Fab Equipment Spending Growth Reaches into Positive Territory
The equipment spending increase in the second half is attributed to growing semiconductor demand and improving average selling price for chips. 2014 is expected to have 23 to 27 percent growth of $41 billion year-over-year (YoY), which would be an all-time record.
Looking at product types, the largest amounts of spending on fab equipment in 2013 will come from the foundry sector, which increases by about 21 percent. This is driven mainly by capex increases by TSMC. The memory sector is also expected to have an increase of only one percent, which is still impressive after a 35 percent decline in the previous year. The MPU sector is expected to grow by about five percent. A double-digit increase in the Analog sector in 2013 will still translate into low absolute dollar amounts, compared to the other sectors mentioned. (See Figure 1)
Figure 1: Fab Equipment Spending by Product Type over Time (Foundries include System LSI)
2014 is expected to be a growth year for fab equipment spending for almost all major product segments. For example, spending for Memory is expected to increase over 40 percent, but spending amounts are not expected to exceed what was seen in 2010 or 2011. MPU is expected to increase by over 50 percent, driven mainly by the ramp of 14nm facilities. The foundry sector is still expected to have the highest spending for fab equipment on 2014, but growth rate may slow to about 15 percent.
Construction Projects: Indicator for more Future Equipment Spending
Typically construction spending is a good indicator for more equipment spending in the future, because any fab built will need to be equipped. Figure 2 is taken directly from the World Fab Forecast (www.semi.org/MarketInfo/FabDatabase) report. See Figure 2.
Figure 2: Fab Construction Spending by Region over Time
Fab construction spending in 2013 has improved to almost 15 percent growth YoY growth ($6.6 billion) with 38 known construction projects. Last year (2012), the number of projects was higher, but the total dollar amount much less with $5.8 billion. This year fewer but much larger projects are under way.
2014 shows a decline of about 18 percent ($5.4 billion) in construction spending with only 21 construction projects expected to be on-going. However, these construction projects include large fabs and some are 450mm-ready. If only a couple of new fabs start construction soon, fab construction spending will improve a lot for 2014.
Top spenders for fab construction in 2013 are TSMC and Samsung, who plan to spend between $1.5 and $2 billion each, followed by Intel, Globalfoundries and UMC. Details in the World Fab Forecast report may hint at some surprises.
Fab Forecast: Cautious but more Optimistic
Compared to other published forecasts in the industry, the SEMI World Fab Forecast shows the same trends for fab equipment in 2014; however, SEMI’s projections about 2013 differ. Two prior fab database reports predicted 0 percent growth in equipment spending, but SEMI now expects two percent growth YoY. Capital expenditure for semiconductor companies is expected to grow three percent in 2013 and 12 percent for 2014. Demand keeps increasing such as media tablets and smart phones, ASP for chips are expected to improve and many revenue predictions for 2013 are in the strong single digits. Overall, the scenario remains cautious but more optimistic than in prior forecasts.
SEMI Industry Research and Statistics Group: a Worldwide Dedicated Team
Since the last fab database publication at the end February 2013 SEMI’s worldwide dedicated analysis team has made a record of 389 updates to 324 facilities (including Opto/LED fabs) in the database. The latest edition of the World Fab Forecast lists 1,144 facilities (including 310 Opto/LED facilities), with 61 facilities with various probabilities starting production this year and in the near future. Seventeen new facilities were added and 8 facilities were closed.
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.
The SEMI 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. Learn more about the SEMI fab databases at: www.semi.org/MarketInfo/FabDatabase and www.youtube.com/user/SEMImktstats
San Jose, California
June 3, 2013