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March 22, 2021

Global Fab Equipment Spending Poised to Log Three Straight Years of Record Highs as COVID-19 Stokes Demand for Electronics

Fueled by surging pandemic-inspired demand for electronics devices, the global semiconductor industry is on track to register a rare three consecutive years of record highs in fab equipment spending with a 16% increase in 2020 followed by forecast gains of 15.5% this year and 12% in 2022, SEMI highlighted in its quarterly World Fab Forecast report.

Fabs worldwide will add about $10 billion worth of equipment in each of the three years as spending climbs to top $80 billion at the end of the forecast period. Explosive demand for electronics that are the backbone of communications, computing, healthcare and online services – sectors that mounted robust responses to the COVID-19 outbreak as the world rallied to curb the coronavirus’s spread – account for much of the spending.
 

World Fab Forecast chart


Fab equipment spending has historically been cyclical, with one or two years of growth typically followed by a downtrend of roughly equal length. The semiconductor industry last saw three straight years of fab equipment investment growth in a run that started in 2016. It was nearly 20 years before that streak that the industry recorded an expansion of at least three years. In the  mid-1990s, the chip industry boasted a four-year period of growth.

The bulk of fab investments in 2021 and 2022 will be seen in the foundry and the memory sectors. Driven by leading edge investment, foundry spending is expected to grow 23% in 2021, reach $32 billion and flatten in 2022. Overall memory spending will increase in the single digits to reach $28 billion in 2021 while DRAM will surpass NAND Flash, and then surge by 26% in 2022 on the strength of both DRAM and 3D NAND investment.

World Fab Forecast PQThe power and MPU segment will also see strong spending growth over the forecast period. Power is forecast to show strong investment growth of 46% and 26%, respectively, in 2021 and 2022 driven by strong demand for power semiconductor devices. MPU will add to the momentum with 40% growth in 2022 as microprocessor investments increase.

Regional Spending

Both Korea and Taiwan are expected to reach historic highs in fab investment this year, with Korea’s spending jumping by 46% to over $22 billion and Taiwan’s expanding by nearly 30% to about $19 billion with some upside potential. China, with the world’s third-largest share of investments, is expected to reduce 2021 spending to around $14 billion as it faces export restriction uncertainty. Europe/Mideast investments will see a solid recovery, with a 33% increase this year to reach $3.4 billion, and the region is posed for further growth in 2022.

Installed Capacity

300mm installed fab capacity will increase by 8% in both 2021 and 2022, while 200mm capacity will grow 4% to 5% in the same period. Foundry capacity is expected to match that 8% growth in 2021 and 2022, surpassing the roughly 6% uptick in each of the past two years. Capacity for memory will continue to increase at a steady pace of about 5% in 2021 and 6% in 2022, while the NAND Flash growth rate is expected to outpace DRAM’s.

The World Fab Forecast report lists 1,374 facilities and lines globally, including 100 future facilities and lines with various probabilities that will start volume production in 2021 or later.

Christian G. Dieseldorff is senior principal analyst in the Industry Research and Analysis group at SEMI in Milpitas, California.