According to SEMI, the semiconductor industry is nearing a third consecutive year of record equipment spending with projected growth of 14 percent (YOY) in 2018 and 9 percent in 2019, a mark that would extend the streak to a historic fourth consecutive growth year. Over the semiconductor industry’s 71-year history, only once before, in the mid-1990’s has the industry had four consecutive years of capital equipment spending growth.
The highest growth in capital spending is in Korea and China. Samsung dominates semiconductor capital spending and China is surging ahead of other markets, as shown below. This chart from June 2018 includes new and refurbished equipment. Samsung is decreasing their investment in 2018 and 2019 but SK Hynix is increasing its Korean capital spending.
China’s equipment spending is forecast to increase 65 percent in 2018 and 57 percent in 2019. 58 percent of investments in China in 2018 and 56 percent in 2019 are by companies with headquarters in other regions such as Intel, SK Hynix, TSMC, Samsung, and GLOBALFOUNDRIES. In 2018, Chinese-owned companies are expected to invest about U.S. $5.8 billion, while non-Chinese will invest U.S. $6.7 billion. Many new companies such as Yangtze Memory Technology, Fujian Jin Hua, Hua Li, and Hefei Chang Xin Memory are investing heavily in the region. These companies are expected to double their equipment investments again in 2019.
Construction spending will reach all-time highs with China construction spending taking the lead at US$6 billion in 2017 and US$6.6 billion in 2018, establishing another record: no region has ever spent more than US$6 billion in a single year for construction. Below is a SEMI chart from March 2018 on semiconductor fab construction, showing the growth in Chinese based fabs.
In March 2018 SEMI said that 3D NAND will lead product sector spending, growing 3 percent each in 2018 and 2019, to US$16 billion and US$17 billion, respectively. DRAM will see robust growth of 26 percent in 2018, to US$14 billion, but is expected to decline 14 percent to US$12 billion in 2019. Foundries will increase equipment spending by 2 percent to US$17 billion in 2018 and by 26 percent to US$22 billion in 2019, primarily to support 7nm investments and ramp of new capacity.
Storage of digital content as well as the memory to process that content is leading investments in semiconductor capital equipment worldwide. This is especially true in China where foreign firm investment, as well as domestic Chinese fab spending, is second only to Korean investment.
