Balita
Fab investment goes into reverse
Total fab investment growth has been revised downward for 2018 to 10% from the 14% predicted in August.
Entering 2018, the semiconductor industry was expected to show a rare fourth consecutive year of equipment investment growth in 2019.
But now SEMI forecasts an H2 2018 decline followed by a further decline in H1 2019.
Overall spending is down 13% in H2 2018 and forecast to be 16% down in H1 2019.
Plunging memory prices and a sudden shift in companies’ strategies in response to trade tensions are driving rapid drops in capital expenditures, especially among leading-edge memory manufacturers, some fabs in China, and some projects for mature nodes such as 28nm.
Industry sectors expecting record-breaking growth in 2019, such as memory and China, are now leading the decline.
Following a sharp fall in NAND flash pricing earlier this year, DRAM prices in the fourth quarter of 2018 began to soften, seemingly ending the two-year DRAM boom.
Inventory corrections and CPU shortages continue, prompting predictions of even steeper price declines.
Memory makers have quickly responded to changing market conditions by adjusting capital expenditures (capex), and tool orders have been put on hold. DRAM spending may see an even deeper correction in 2019 while NAND flash-related investment could also suffer a double-digit decline next year.
A review of spending by industry sector reveals that, while memory capital expenditures were expected to grow by 3% in 2019, they are now forecast to drop by 19% y-o-y.
DRAM is hit the hardest with a fall of 23%, while 3D NAND will contract 13% in 2019.
China and Korea are suffering the largest drops in spending since the August report.
Projections for equipment spending in China in 2019 have been revised from $17 billion in August to $12 billion, with multiple factors at play including a slowing memory market, trade tensions, and delays in some project timelines.
SK Hynix is expected to slow DRAM expansion in 2019. GLOBALFOUNDRIES reconsidered its plan for the Chengdu fab, delaying the ramp. SMIC and UMC are slowing spending. The Fujian Jinhua DRAM project has been put on hold.
In August, SEMI forecast that Korea fab equipment spending would decline by 8%, to $17 billion, in 2019 – a projection that has now been slashed to $12 billion, a drop of 35% y-o-y.
Samsung began to reduce equipment investments in the fourth quarter of 2018, and the spending cuts are expected to continue into the first half of 2019. Samsung’s largest projects to be hit are P1 (slowdown) and the ramp of P2 Phase 1 (delayed). Adjustments to the S3 schedule are also expected.
While SEMI’s detailed, fab-level data show that some memory makers will scale back capital expenditures for 2019, one company stands out. Micron will increase capex for FY19 to $10.5 billion, up about 28%, or $8.2 billion, from FY18.
Micron plans to expand and upgrade facilities, invest less in NAND in FY19 than in FY18, and anticipates no new wafer starts.
In other sectors, especially for non-leading-edge and specialty technologies, some fabs are still increasing investments.
Ipto – especially CMOS image sensors – shows strong growth, surging 33 percent to $3.8 billion in 2019. Micro (MPU, MCU and DSP) is expected to grow more than 40% in 2019 to $4.8 billion.
Analogue and mixed signal investments also show strong growth – 19% – in 2019, bringing spending to $660 million.
The foundry sector, the second largest product segment in total investments at $13 billion, shows a 10% rise in 2019.
The recent three-year boom in the semiconductor market was chiefly driven by the memory sector (e.g. DRAM and 3D NAND flash).
One company, Samsung, invested at unprecedented levels, lifting the entire industry. Other memory makers rode the wave of the boom cycle by boosting investments.
And China’s profile rose with its huge investments. The industry was poised for four consecutive years of revenue growth – a streak not seen since the 1990s.
Now the industry faces well-known threats of inventory correction and the trade war. Both phenomena could slow growth significantly and if both unfold in full force in tandem, the impact could be serious.
The data in SEMI’s latest publication of the World Fab Forecast show that the four-year growth streak will not materialize.
Entering 2018, the semiconductor industry was expected to show a rare fourth consecutive year of equipment investment growth in 2019.
But now SEMI forecasts an H2 2018 decline followed by a further decline in H1 2019.
Overall spending is down 13% in H2 2018 and forecast to be 16% down in H1 2019.
Plunging memory prices and a sudden shift in companies’ strategies in response to trade tensions are driving rapid drops in capital expenditures, especially among leading-edge memory manufacturers, some fabs in China, and some projects for mature nodes such as 28nm.
Industry sectors expecting record-breaking growth in 2019, such as memory and China, are now leading the decline.
Following a sharp fall in NAND flash pricing earlier this year, DRAM prices in the fourth quarter of 2018 began to soften, seemingly ending the two-year DRAM boom.
Inventory corrections and CPU shortages continue, prompting predictions of even steeper price declines.
Memory makers have quickly responded to changing market conditions by adjusting capital expenditures (capex), and tool orders have been put on hold. DRAM spending may see an even deeper correction in 2019 while NAND flash-related investment could also suffer a double-digit decline next year.
A review of spending by industry sector reveals that, while memory capital expenditures were expected to grow by 3% in 2019, they are now forecast to drop by 19% y-o-y.
DRAM is hit the hardest with a fall of 23%, while 3D NAND will contract 13% in 2019.
China and Korea are suffering the largest drops in spending since the August report.
Projections for equipment spending in China in 2019 have been revised from $17 billion in August to $12 billion, with multiple factors at play including a slowing memory market, trade tensions, and delays in some project timelines.
SK Hynix is expected to slow DRAM expansion in 2019. GLOBALFOUNDRIES reconsidered its plan for the Chengdu fab, delaying the ramp. SMIC and UMC are slowing spending. The Fujian Jinhua DRAM project has been put on hold.
In August, SEMI forecast that Korea fab equipment spending would decline by 8%, to $17 billion, in 2019 – a projection that has now been slashed to $12 billion, a drop of 35% y-o-y.
Samsung began to reduce equipment investments in the fourth quarter of 2018, and the spending cuts are expected to continue into the first half of 2019. Samsung’s largest projects to be hit are P1 (slowdown) and the ramp of P2 Phase 1 (delayed). Adjustments to the S3 schedule are also expected.
While SEMI’s detailed, fab-level data show that some memory makers will scale back capital expenditures for 2019, one company stands out. Micron will increase capex for FY19 to $10.5 billion, up about 28%, or $8.2 billion, from FY18.
Micron plans to expand and upgrade facilities, invest less in NAND in FY19 than in FY18, and anticipates no new wafer starts.
In other sectors, especially for non-leading-edge and specialty technologies, some fabs are still increasing investments.
Ipto – especially CMOS image sensors – shows strong growth, surging 33 percent to $3.8 billion in 2019. Micro (MPU, MCU and DSP) is expected to grow more than 40% in 2019 to $4.8 billion.
Analogue and mixed signal investments also show strong growth – 19% – in 2019, bringing spending to $660 million.
The foundry sector, the second largest product segment in total investments at $13 billion, shows a 10% rise in 2019.
The recent three-year boom in the semiconductor market was chiefly driven by the memory sector (e.g. DRAM and 3D NAND flash).
One company, Samsung, invested at unprecedented levels, lifting the entire industry. Other memory makers rode the wave of the boom cycle by boosting investments.
And China’s profile rose with its huge investments. The industry was poised for four consecutive years of revenue growth – a streak not seen since the 1990s.
Now the industry faces well-known threats of inventory correction and the trade war. Both phenomena could slow growth significantly and if both unfold in full force in tandem, the impact could be serious.
The data in SEMI’s latest publication of the World Fab Forecast show that the four-year growth streak will not materialize.