By Christian G. Dieseldorff, Industry Research & Statistics Group, SEMI
SEMI just published the latest quarterly update of its World Fab Forecast report. While the year started with a positive outlook, the initial optimism has largely deflated, and the year will end largely flat. Fab equipment spending growth (new and used) for 2015 is expected to be 0.5 percent (US$ 35.8 billion). For 2016, spending is forecast to grow by 2.6 percent ($36.7 billion), with a possible continued upward trend.
Past trends prove again the close correlation of spending to global GDP and revenue. The IMF predicted worldwide GDP to grow by 3.5 percent back in May, and has revised it down to only 3.1 percent. Likewise, as of May, the year’s average revenue growth for the semiconductor industry was predicted to be in the mid- to high-single digits (according to ten leading market research firms). Now these firms have revised their 2015 predictions to an average of just 1.3 percent.
Fab equipment spending (new, used and in-house) follows the same rollercoaster as revenue, and is now expected to grow by only 0.5 percent by the end of 2015, possibly 1 percent, according to SEMI.
In 2015, 80 to 90 percent of fab equipment spending went to 300mm fabs, while only 10 percent was for 200mm or smaller. SEMI’s recently published “Global 200mm Fab Outlook” provides more detail about past and future 200mm activities.
Cherish the Memory
Examining fab equipment spending by product type, Memory accounts for the largest share in 2015 and 2016. In 2015, DRAM spending was second in place but in 2016 3D Flash will, by far, outspend DRAM.
Most DRAM spending in 2015 went towards 21/20nm ramp. In 2016, DRAM companies are expected to start risk production of 1xnm (for example, Samsung in 1H 2016; Hynix in 2H 2016; and Micron in 2016).
While 2015’s spending was dominated by DRAM, SEMI reports that 2016 will be dominated by Flash, mainly 3D-related architectures. Capacity for 3D-NAND will continue to surge. SEMI’s report tracks 10 major 3D producing facilities, with a capacity expansion of 47 percent in 2015 and 86 percent in 2016.
Foundry Segment Holds Steady
The Foundry segment is next in terms of the largest share of fab equipment spending in 2015 and 2016. In general, the foundry segment shows steadier, more predictable spending patterns than other device product segments. The largest foundry player, TSMC, has a strong impact on the foundry industry. In the second half of 2015, TSMC cut 2015 capex from $10.5 billion to $8 billion, due to a flagging market. SEMI expects a stronger fourth quarter in 2015 for equipment spending for foundry as TSMC fulfills its capital expenditure for the year and we expect an increased capex in 2016.
TSMC recently announced revenue expectation for 2016 to be in double digits and expects to increase capex for 2016 as it ramps 16nm and adds initial 10nm capacity.
It’s Only Logical (and MPU)
Coming in third place in fab equipment spending, MPU had lower spending in 2015. Intel revised its planned capex down four times, from $10 billion to $8.7 billion then to $7.7 billion, and finally to $7.3 billion, and it decided to delay the launch of 10nm products (Cannonlake) to 2H17. Intel still announced lofty plans for 2016 capex, around $10 billion. Especially in 2H16, spending will pick up for anticipated 10nm activities.
Meanwhile for Logic spending has been very strong in 2015, with 90 percent growth, driven by SONY’s CMOS image sensors. This exuberant growth, however, is expected to slow down in 1H16.
Consequence of Consolidations: the End of Wild Times?
Between 2010 and 2014, change rates for equipment spending fluctuated wildly, from +16 percent in 2011 to -16 percent in 2012, -8 percent in 2013 to 15 percent in 2014. These drastic changes have been replaced by dampened spending growth rate for 2015 and into 2016. Multiple reasons may apply: a more mature and lower growth industry, increased caution regarding capacity ramp, or perhaps the recent frenzy of consolidations further concentrating capex spending. SEMI’s next quarterly publication, in February 2016, will give further insight into early indicators of 2017. Will sedate, positive spending growth continue?
The SEMI World Fab Forecast Report in Excel format, tracks spending and capacities for 1,167 facilities across industry segments from Analog, Power, Logic, MPU, Memory, and Foundry to MEMS and LEDs facilities. It uses a bottoms-up approach methodology, providing high-level summaries and graphs and in-depth analyses of capital expenditures, capacities, technology and products by fab. Learn more about the SEMI fab databases at: www.semi.org/MarketInfo/FabDatabase and www.youtube.com/user/SEMImktstats