Semiconductor CapEx To Grow 13.0% In 2021

Total market to reach $127B this year; Samsung, TSMC are top spenders.


Semiconductor capital expenditures grew 9.2% in 2020 to US$112.1 billion. This is $14.1 billion higher than our spring 2020 forecast, and $3.2 billion higher than our fall 2020 forecast. As shown in the graph below, the total 2020 CapEx was $9.4 billion larger than the $102.7 billion spent in 2019. Semico is forecasting 2021 CapEx to reach $127 billion, an increase of 13.0%.

Source: Semico Research Corp. and company sources

The top 15 spenders for 2020 to 2021 are presented in the following figure. These companies represent 91% of the total CapEx in 2020, and they are expected remain at 91% of the total in 2021. The top 15 companies stayed the same from 2019 to 2020 and are forecast to be the same again in 2021.

Source: Semico Research Corp. and company sources

A number of companies have reported estimated capital spending for 2021, while others have not. Notably, Samsung and Intel have both chosen not to provide guidance at this time. As a result, Semico has provided estimates for both companies in the above chart based on our expectations for their needs for equipment and construction. Out of the companies that have provided guidance, six of them report an increase in expected spending, ranging from 15.1% (SK Hynix) to 82.4% (Western Digital). Only two companies estimate a decrease in spending in 2021: Micron (-11.1%) and SMIC (-24.6%).

The obvious outlier shown in the chart is TSMC, which is forecasting a 54.1% increase in capital spending from $17.2 billion in 2020 to a range of $25B to $28B in 2021. The range is represented at the midpoint of $26.5 billion in the chart as well as in our calculations for total annual spending. About 80% of the $26.5 billion will be spent on advanced process technologies: 3nm, 5nm and 7nm. The remainder will be split roughly equally between packaging/mask making and specialty technologies. A small portion of the total will be spent on construction of the new fab in Phoenix, Arizona which will begin this year.

In y out the past 10 years, TSMC has underestimated how much they will spend. This is illustrated in the next chart. TSMC’s capital spending is related to expected conditions over the next one or two years and often changes over the course of the year. The 2021 CapEx plan will result in a capital intensity higher than the long-term mid-30% target range.

Source: Semico Research Corp. and TSMC

Although Samsung has not yet stated its 2021 planned CapEx, the company’s second half 2020 expenditures of 18.3 trillion won were up 24% over the 14.7 trillion won spent in 1H of 2020, and they were up 33% over the 13.8 trillion won spent in 2H19. For the year, the company’s CapEx increased 46% in 2020. Semico expects Samsung to have a comparable level of spending in 2021 due to the number of construction projects underway, as well as continuing the transition to more advanced process nodes.

Source: Semico Research and Samsung Electronics

Overall, capital expenditures will increase by almost $15 billion in 2021. Just over $9 billion of that can be attributed to TSMC alone, but there are a number of other companies expanding capacity and migrating to new process nodes. The semiconductor shortages currently being experienced in the electronics industry will still be felt for months to come.

Semico Research maintains capital spending, R&D spending, and revenue tracking for over 60 companies in the semiconductor market. This includes fabless companies, foundries, and OEMs. This data supports our overall forecast as well as numerous reports, such as the Fab Database report. For more information, contact Rick Vogelei.

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