Solid Years: Cautious Optimism Drives Equipment Spending Into 2015

Worldwide semiconductor capital expenditure growth for this year is expected to be 11% and will increase another 8% in 2015. Throughout 2014, SEMI has tracked 177 facilities worldwide investing about US$34 billion on semiconductor equipment. In 2015, 190 facilities are being tracked with fab equipment spending worth over $40 billion. The double-digit growth in fab equipment spending for this year and next follows spending declines in the two years leading into 2014.

Table 1: Fab equipment spending Front End (including new, used, in-house)

Back in August 2014, SEMI predicted fab equipment spending to rise by 21% for this year, however, push out in spending by some companies resulted in a slight downward revision. Now we expect growth for 2014 to be a bit more modest, but still very healthy in the 16 to 18% range.

Looking back, the beginning of 2014 appeared euphoric, with high capital expenditure expected by major players: TSMC had announced plans to spend in the $10 billion range, Samsung Electronics was at 14.5 Trillion Won, and Intel planned around $11 billion (+/-$500 million). However, equipment spending for some of the key fab projects) slowed down around the middle of the year, and some spending has pushed more into 2015. For example, capital expenditures by Samsung Electronics though the end September 2014 was only at 58% of their announced capex. We also see TSMC equipment spending for Front End facilities to be somewhat lower than originally expected. One reason for these push outs is that the adoption of 14/16nm nodes and 3D NAND began slow in 2014 but is expected to accelerate in 2015.

Fab equipment spending for next year, 2015, looks robust, and, compared to 2014, even more companies will join the billion dollar club, spending $1 billion or more for the year. Inotera will more than double its capex, from $730 million in 2014 to $1.66 billion in 2015. TSMC has indicated that its 2015 capex will exceed $10 billion; and Intel will spend less in 2015 than in 2014, but still plans about $10 billion. As detailed in SEMI’s World Fab Forecast report there are ten fab projects with major investments for equipment spending ranging between $1 billion and $2 billion in 2015 compared to 7 fab projects in 2014.

Large fab projects account for growth in several regions for equipment spending
In China, Samsung is expected to continue ramping their 3D NAND fab in Xian; SK Hynix will upgrade Fab C2 in Wuxi; and SMIC will further expand Fab 8 and their new 12-inch fab in Beijing

In the Europe/Mideast region, growth is led by Intel as it ramps Ireland for 14nm and increase investments in Israel.

In Japan, Flash Alliance will ramp Fab 5, phase 2, and continue to upgrade existing facilities. Toshiba is preparing Fab 2 in Yokkaichi (currently constructing) and expected to begin with equipment in second half of 2015. And Micron said it would spent 100 billion Yen in Hiroshima.

The largest projects in Korea are Samsung’s Line 17 (DRAM module and Logic module), Line 16 and SK Hynix’s M12, M14, and M10.

Growth in Southeast Asia is led by Micron, with upgrades for Fab 7 and IMFT, and by GlobalFoundries, with Fab 7 and Fab 6.

In Taiwan, TSMC is working on multiple fab projects at the same time such as Fab 14 phases 5, 6 and 7, and Fab 12 phase 6 and phase 7. Inotera is more than doubling capital expenditure in 2015 from $730M to $1.66B and ramping 20nm DRAM output.

Although ranked third in overall regional spending with over $7.2 billion, spending in the Americas will drop to -11% for 2015. Intel is expected not to add more capacity in this region, but will invest in upgrades to existing fabs. We also expect some more activity in D1X modules Globalfoundries Fab 8 with its expansion is expected to be at full capacity by 2015 and TDC is expected to be in full ramp mode in 2015. Globalfoundries also has plans for Fab 8.2 and SEMI’s World Fab Forecast report reveals their forecast when this fab will begin construction. We also expect Samsung to increase spending in Austin, Texas as increase ramp for 14nm System LSI.

After two years of declining spending, we see two years of healthy fab equipment spending growth, in double digits for 2014 and 2015, will make both years solid spending years.
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