Fab equipment spending up 25%

Capital expenditure for semiconductor fab equipment spending is expected to increase to US$39.8 billion in 2014, the highest on record, according to the SEMI World Fab Forecast.

Semiconductor revenue has improved in 2013 compared to 2012 and early forecasts for 2014 project revenue growth averaging about 8%. Semiconductor companies have adjusted their capital expenditure accordingly, and the SEMI report tracks over 200 projects, with details revealing that fab equipment spending is expected to decline by 1% in 2013 (to $31.8 billion), but increase by 25% in 2014, including new, used and internally manufactured in-house equipment.

Overall fab spending in the first half of 2013 was slow, especially for fab equipment spending. Fab equipment spending is stronger in the second half of 2013, with a 30 to 40% increase over the first half. The SEMI data shows a different outlook for fab construction projects, forecasting a 25% spending increase in 2013 to over $7 billion and then a drop of 16% in 2014 to about $5.9 billion. Fabs under construction this year will begin equipping next year, which affects fab equipment spending.

Fab equipment spending for dedicated foundries remains strong in 2013 ($12 billion) and in 2014 ($13 billion) - a growth rate of 5% in 2014. In the years prior to the economic downturn, fab equipment spending for DRAM was the highest spending industry segment. Since 2011, however, the dedicated foundry sector replaced DRAM as the leading industry sector.

While DRAM equipment spending dropped by 35% in 2011 and 25% in 2012, the SEMI data shows that DRAM fab equipment spending will increase by 17% in 2013 and at least 30% in 2014. An increase of about 2 to 3% for installed capacity for DRAM in 2014 is small but remarkable, given that the industry has not added any new DRAM capacity for years and actually cut back capacity between 2011 and 2013.

The sector with largest growth rate for fab equipment spending in 2014 is expected to be Flash with a 40 to 45% increase (YoY). Over the last few years, capacity additions for the Flash sector also stagnated. SEMI’s reports show detailed predictions for robust spending in DRAM and Flash by several large companies including Micron and Samsung. Overall fab equipment spending for Flash alone is expected to hit a record of almost $8 billion in 2014. After Flash and DRAM, MPU is expected to show the next largest growth in 2014, with fab equipment spending growing by over 40% (YoY). Intel is now preparing for 14 nm, kicking off an MPU surge for 2014. The World Fab Forecast report gives insight into Intel’s preparations for 14 nm.

Since the last fab database publication at the end of May 2013, the SEMI worldwide dedicated analysis team has made 242 updates to 205 facilities (including Opto/LED fabs) in the database. The latest edition of the World Fab Forecast lists 1147 facilities (including 247 Opto/LED facilities), with 66 facilities with various probabilities starting production this year and in the near future. SEMI added 14 new facilities and closed eight facilities.

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 semiconductor manufacturing will look in 2013 and 2014, and learning more about capex for construction projects, fab equipping, technology levels and products.