Semiconductor CAPEX Growth Increases Fab Equipment Spending!

With worldwide capex growth of 8%, fab equipment spending is expected to increase by 15% in 2015, according to the most recent edition of the SEMI (www.semi.org) World Fab Forecast. SEMI’s data also predicts a slowdown of fab equipment spending in 2016 to low single digits (2-4%). Looking back to the last 25 years, after two years of growth a negative year typically followed. This may not be the case this time as developments in the industry are pointing to a small but positive 2016.

Most fab equipment spending in 2015 is expected for Foundry followed by Memory. The share in 2015 for both is the same with each about 40%, and the share for Logic and MPU is expected at about 11%. Looking into 2016, the share for foundry is expected to increase to almost 44% followed by Memory with about 38% and Logic/MPU with 13%.

Since its last publication in November 2014, about 270 updates were made to the SEMI report, including data on 17 new facilities. The report tracks fab spending for construction and equipment, as well as capacity changes, and technology nodes transitions and product type changes by fab.

[TABLE] align=”center” border=”1″
|-
| style=”width: 173px; height: 29px” |
| style=”width: 72px; height: 29px” | 2013
| style=”width: 72px; height: 29px” | 2014
| style=”width: 72px; height: 29px” | 2015
| style=”width: 93px; height: 29px” | 2016
|-
| style=”width: 173px; height: 19px” | Fab equipment*
| style=”width: 72px; height: 19px” | $29
| style=”width: 72px; height: 19px” | $35
| style=”width: 72px; height: 19px” | $40
| style=”width: 93px; height: 19px” | $41 to $42
|-
| style=”width: 173px; height: 29px” | Change % Fab equipment
| style=”width: 72px; height: 29px” | -10%
| style=”width: 72px; height: 29px” | +19%
| style=”width: 72px; height: 29px” | +15%
| style=”width: 93px; height: 29px” | +2% to 4%
|-
| style=”width: 173px; height: 28px” | Fab construction US$
| style=”width: 72px; height: 28px” | $9
| style=”width: 72px; height: 28px” | $8
| style=”width: 72px; height: 28px” | $5
| style=”width: 93px; height: 28px” | $7
|-
| style=”width: 173px; height: 28px” | Change % construction
| style=”width: 72px; height: 28px” | +14%
| style=”width: 72px; height: 28px” | -11%
| style=”width: 72px; height: 28px” | -31%
| style=”width: 93px; height: 28px” | +31%
|-

According to the SEMI forecast, the highest fab equipment spending in 2015 will occur in:

• Taiwan (US$ 11.9 billion, 40% increase over 2014)
• Korea ($8.7 billion, a 19% increase)
• Americas ($6.7 billion, a 12% decline)
• China ($4.8 billion, a 17% increase)
• Japan ($4.2 billion, a 10% increase)
• Europe/Mideast region ($2.7 billion, a 16% increase)
• South East Asia ($1.3 billion, a 15% increase)

Total capital expenditure (CAPEX) for most of the large semiconductor companies is expected to increase by 8% in 2015, and grow another 3% in 2016. These increases are driven by new fab construction projects and also ramp of new technology nodes. Fab spending, such as construction spending and equipment spending, are fractions of a company’s CAPEX. Typically, if CAPEX shows a trend to increase, fab spending follows. Spending on construction projects, which typically represents new cleanroom projects, will see a significant (-31%) decline in 2015, but is expected to rebound by 31% in 2016.

New facilities beginning construction in 2015 and 2016 will start equipping in 2016 or later. SEMI’s data show that eight facilities with various probabilities may start construction in 2015 (including one LED. In 2016, construction will possibly begin on five or eight new fabs.

The SEMI positive outlook for the year is based on spending trends tracked as part of our fab investment research. For the World Fab Watch, SEMI uses a “bottom’s up” company-by-company and fab-by-fab approach which points to strong investments by foundries and memory companies, driving this year’s growth. Learn more about the SEMI fab databases at: www.semi.org/MarketInfo/FabDatabase.