Equipment spending shows strong growth for 2014 and 2015; slow capacity additions

SAN JOSE, USA: Front End fab equipment spending (including new, used, and in-house) is projected to increase up to another 20 percent in 2015 to US$ 42 billion, according to most recent edition of the SEMI World Fab Forecast.

In 2015, equipment spending could mark a historical record high, surpassing the previous peak years of 2007 ($39 billion) and 2011 ($40 billion). In 2014, the report predicts growth of approximately 21 percent for Front End fab equipment spending, for total spending of $34.9 billion.

Seven companies are expected to spend $2 billion or more in 2014, representing almost 80 percent of all fab equipment spending for Front End facilities; a similar pattern is expected in 2015. About 90 percent of all equipment spending is for 300mm fabs.

According to the World Fab Forecast, in 2014, the five regions with the highest forecast spending on equipment are: Taiwan ($9.7 billion), Americas ($7.8 billion), Korea ($6.8 billion), China ($4.6 billion), and Japan ($1.9 billion). In 2015, the same regions will lead: Taiwan ($12 billion), Korea ($8 billion), Americas ($7.9 billion), China ($5 billion), and Japan ($4.2 billion). Spending in Europe is expected to nearly double (from 2014 to 2015) to $3.8 billion.

As Fig. 1 illustrates, before the last economic downturn, most equipment spending was for new additional capacity. SEMI reports that in 2010 and 2011, fab equipment spending growth rates increased dramatically, but installed capacity grew by only 7 percent in both years. In 2012 and 2013, installed capacity grew 2 percent or less. Some industry segments, such as foundries, see continuous capacity expansion, while other segments show much lower growth — pulling down the total global growth rate for installed capacity to below the 3 percent mark.

In addition to foundries, the World Fab Forecast report captures capacities across all industry segments as well as System LSI, Analog, Power, MEMS, LED, Memory and Logic/MPUs.

DRAM is now slowly coming out of a declining trend with -3 percent in 2014 and reaching close to zero by end of 2015. Over the past three to four years, some major players have switched fabs from DRAM to System LSI or Flash while others have discontinued DRAM production completely, contributing to declining DRAM capacity.

The SEMI World Fab Forecast also provides detailed data about fab construction projects, with spending expected to total $6.7 billion in 2014 and over $5.0 billion in 2015. In 2014, the leading regions for construction spending are Taiwan, Americas, and Korea.  In 2015, the highest spending is expected in Europe/Mideast, followed by Taiwan and Japan.