Moderate growth and minor correction in semiconductors

At SEMICON West two weeks ago, Bob Johnson of Gartner presented the outlook for the semiconductor market, semiconductor capital spending, and wafer fab equipment spending. Thanks to Daniel Nenni for providing the link to the SEMI/Gartner Market Symposium presentations at https://sites.google.com/a/semi.org/market-symposium/home/speaker-presentations

Based on Bob Johnson’s presentation and Gartner’s capital spending forecast released the same week, the semiconductor market is expected to show moderate growth in the 2% to 7% range over through 2018. The market is projected to pick up slightly to 6.7% growth in 2014 following 5% in 2013. Growth decelerates in the next two years, reaching a low of 2.3% in 2016. The market picks up slightly to 3.5% growth in 2017 and 4.4% in 2018. Semiconductor capital expenditures should experience a more volatile cycle, peaking at 8.9% growth in 2015, declining 3.5% in 2016, and recovering to 8.6% growth in 2018. Spending on fab equipment bounces back to a strong 16% increase in 2014 after an 8% decline in 2013. Fab equipment tracks closely with overall capital spending in 2016 to 2018.

The key drivers of the semiconductor market in the Gartner forecast are some of the usual suspects: smartphones and ultra-mobile PCs (including tablets, clamshells and hybrids). Gartner also expects solid state drives will be a significant growth driver – resulting in NAND flash memory surpassing DRAM in market size in 2016.

Christian Dieseldorff and Daniel Tracy of SEMI presented their forecast for fab equipment and materials through 2015. SEMI expects the fab equipment market will be more volatile than in Gartner’s forecast, growing 20.8% in 2014 after a 13.8% decline in 2013. Silicon wafers are expected to be basically flat in 2014 after a 12.9% decline in 2013. Other semiconductor manufacturing materials are projected to show moderate growth in the 5% to 6% range.

[TABLE] border=”1″
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| style=”width: 719px” |
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| style=”width: 218px; text-align: center” | Market Change in US$
(Source: SEMI, July 2014)
| style=”width: 167px; text-align: center” | 2013
| style=”width: 167px; text-align: center” | 2014
| style=”width: 167px; text-align: center” | 2015
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| style=”width: 218px; text-align: center” | Fab equipment
| style=”width: 167px; text-align: center” | -13.8%
| style=”width: 167px; text-align: center” | 20.8%
| style=”width: 167px; text-align: center” | 10.8%
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| style=”width: 218px; text-align: center” | Silicon wafers
| style=”width: 167px; text-align: center” | -12.9%
| style=”width: 167px; text-align: center” | -0.2%
| style=”width: 167px; text-align: center” | 2.2%
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| style=”width: 218px; text-align: center” | Other materials
| style=”width: 167px; text-align: center” | 3.4%
| style=”width: 167px; text-align: center” | 6.2%
| style=”width: 167px; text-align: center” | 5.0%
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| style=”width: 218px; text-align: center” | Total Materials
| style=”width: 167px; text-align: center” | -2.9%
| style=”width: 167px; text-align: center” | 4.0%
| style=”width: 167px; text-align: center” | 4.1%
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SEMI also showed the major shift over the 15 years in fab equipment spending by region. In 1999 the Americas, Japan and Europe/Mideast accounted for 71% of spending while Taiwan, South Korea and China accounted for only 26%. In 2015 the Americas, Japan and Europe Mideast are forecast to make up only 37% of spending and Taiwan, South Korea and China should total 60%.