Forecasts Present Fab Tools Spending to Hit All-Time Excessive

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As trade leaders push for elevated fab capability to deal with persistent chip shortages, world entrance–finish fab gear spending is anticipated to extend by 18 p.c over the following yr, based on SEMI’s newest World Fab Forecast report. The trade group forecasts spending to achieve $107 billion in 2022 and expects a progress trajectory effectively into 2023.

“International fab gear spending is forecast to have one other wholesome yr in 2023 and is anticipated to stay above the $100 billion mark,” mentioned Sanjay Malhotra, vice chairman of Company Advertising and marketing and the Market Intelligence Workforce at SEMI (Determine 1). “We anticipate world semiconductor capability to keep up regular progress this yr and in 2023.”

SEMI president and CEO Ajit Manocha says the anticipated enhance in fab spending displays the necessity to present further capability for a variety of market segments.

“Crossing the $100 billion mark in spending on world fab gear for the primary time is a historic milestone for the semiconductor trade,” Manocha mentioned. “This vital achievement is a tribute to the relentless drive so as to add and improve capability to deal with a various vary of markets and rising functions, solidifying expectations for lengthy–time period trade progress to allow electronics for the digital world.”

SEMI additionally reported world semiconductor trade capability is anticipated to extend by 8 p.c this yr, which is able to edge off to six p.c in 2023. In the meantime, will increase in capability throughout 150 fabs and manufacturing traces will account for greater than 83 p.c of fab gear spending in 2022, based on SEMI.

Different trade teams have equally reported that general fab investments will solely proceed to develop over the following few years. This appears well timed, particularly given the truth that trade heavyweights are alluding to continued provide chain disruptions; as evidenced by ASML chief government Peter Wennink’s warning that chip shortages might proceed effectively into 2024 because of vital gear shortages.

Final month, IC Insights forecasted semiconductor trade capital expenditures (capex) might attain a whopping $190.4 billion by 2022, as beforehand reported by EE Occasions. This displays an 84 p.c enhance in comparison with three years in the past in pre–pandemic occasions. GlobalFoundries’ capex, for instance, is forecasted to achieve $4.5 billion, a 155 p.c enhance in comparison with a yr in the past.

But analysts argue current efforts to extend fab capability might result in an even bigger drawback: capability glut.

“There’s positively a chance of an oversupply. Even when the demand saved up, assuming there’s no financial fallout, no trade correction, we might nonetheless be heading there, particularly when you contemplate the truth that Intel’s at present making an attempt to construct 4 model–new fabs, in addition to TSMC, Samsung and others,” mentioned Tirias Analysis founder and principal analyst Jim McGregor.

“When you add up all of the capability that might probably be coming on-line, we might overshoot it, and it wouldn’t be the primary time. Micron’s Lehi fab sat vacant for over a decade. Intel’s Fab 42, which is now in full manufacturing, additionally sat vacant for over a decade. It occurs, and there’s little question it might occur once more.”

Even then, the consensus appears to be that within the occasion the U.S. overshoots demand, investments in U.S. fab capability means much less reliance on China for vital semiconductor supplies and gear.

“It’s nonetheless going to be necessary that we’ve extra manufacturing capability in different areas, particularly Europe and North America,” McGregor mentioned. “Take into consideration the truth that we’ve over 50 p.c of our semiconductor manufacturing capability in areas which might be threatened by communist regimes. That’s a scary thought.”