Poised for more growth

By Christian G. Dieseldorff, Industry Research & Statistics Group, SEMI

The most recent edition of the SEMI World Fab Forecast report — which tracks fab spending for construction and equipment, as well as capacity changes, and technology nodes transitions and product type changes by fab — reveals a positive forecast. The report shows that fab equipment spending in 2014 increased 20 percent, is expected to rise 15 percent in 2015, with another increase of 2-4 percent in 2016. Spending on construction projects, which typically represents new cleanroom projects, will see a significant decline in 2015 with -32 percent, but is expected to increase by 32 percent in 2016.  Since its last publication in November 2014, about 270 updates were made including data on 17 new facilities.

Fab Equipment/Fab Construction (2013-2016)

 

2013

2014

2015

2016

Fab equipment* 

$29.4

$35.2

$40.5

$41 to $42

Change % Fab equipment

-10.0%

19.8%

15.0%

2% to 4%

Fab construction US$

$8.8

$7.7

$5.2

$6.9

Change % construction

13.6%

-11.0%

-32.0%

+32.0%

Chart US$, in billions; Source: SEMI, March 2015SEMI World Fab Forecast and its related Fab Database reports track any equipment needed to ramp fabs, upgrade technology nodes, and expand or change wafer size, including new equipment, used equipment, or in-house equipment and spending on facilities for installation.

The SEMI World Fab Forecast and its related Fab Database reports track any equipment needed to ramp fabs, upgrade technology nodes, and expand or change wafer size, including new equipment, used equipment, or in-house equipment and spending on facilities for installation.

Fab spending, such as construction spending and equipment spending, are fractions of a company’s total capital expenditure (capex). Typically, if capex shows a trend to increase, fab spending will follow.  Capex for most of the large semiconductor companies is expected to increase by eight percent in 2015, and grow another three percent in 2016. These increases are driven by new fab construction projects and also ramp of new technology nodes. Spending on construction projects, which typically represents new cleanroom projects, will experience a significant -32 percent decline in 2015, but is expected to rebound by 32 percent in 2016.

With worldwide capex growth of 8 percent, fab equipment spending is expected to increase by 15 percent in 2015.  At this point, SEMI’s data predict a slowdown of fab equipment spending in 2016 to low single digits.  No negative change is currently expected in our forecast scenario. 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. Developments in the industry are pointing to a small but positive 2016.

Most fab equipment spending in 2015 is for foundry, memory, and Logic+MPU. Discretes including LED remain at about 4 percent share, MEMS/Other about 2-3 percent and Analog at less than1 percent.  Distribution will not change for 2016, except for foundry spending, which continues to increase year-over-year.

Comparing regions across the world, according to SEMI, the highest fab equipment spending in 2015 will occur in Taiwan, with US$ 11.9 billion, followed by Korea with US$ 9 billion.  The region with third largest spending, the Americas, is forecast to spend about US$ 7 billion.  Yet growth will decline in the Americas, by 12 percent in 2015, and decline by 12 percent in 2016 again.  Fourth in spending is China, with US$ 4.7 billion in 2015 and US$ 4.2 billion in 2016. In other regions, Japan’s spending will grow by about 6 percent in 2015, to US$ 4 billion; and 2 percent in 2016, to US$ 4.2 billion.  The Europe/Mideast region will see growth of about 20 percent (US$ 2.7 billion) in 2015 and over 30 percent (US$ 3.5 billion) in 2016. South East Asia is expected to grow by about 15 percent (US$ 1.3 billion) in 2015 and 70 percent (US$ 2.2 billion) in 2016.

New facilities beginning construction in 2015 and 2016 will start equipping in 2016 or later. SEMI’s data show that seven new facilities will start construction in 2015 (including one LED and one shell). In 2016, construction will possibly begin on five or six new fabs.

2015 is expected to be the second consecutive year in equipment spending growth. Our positive outlook for the year is based on spending trends we are tracking as part of our fab investment research. As noted in some of the examples cited above, the “bottom’s up” company-by-company and fab-by-fab approach 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.

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