Semiconductor Value Chain

Record Fab Equipment Spending Expected in 2014

09 September 2013

Capital expenditures for semiconductor fab equipment spending will increase by 25 percent to $39.8 billion in 2014, the highest on record, according to the fab tool vendor trade group SEMI.

By contrast, spending is expected to decline 1 percent this year to $31.8 billion, SEMI said.

The SEMI reports states that in the years prior to the economic downturn, fab equipment spending for DRAM was the highest spending industry segment. Since 2011, however, the dedicated foundry sector has replaced DRAM as the leading industry sector.

The sector with largest growth rate for fab equipment spending in 2014 is expected to be flash memory, with a 40 to 45 percent year-on-year increase. After flash and DRAM, the microprocessor segment is expected to show the next largest growth in 2014, with fab equipment spending growing by over 40 percent year-over-year. Intel alone is kicking off a microprocessor capital expenditure surge for 2014 by to prepare for 14-nm chip production.

On the revenue side, semiconductor device revenues dropped by about 2.7 percent in 2012, which forced many companies to slow down capacity additions last year, according to Christian Gregor Dieseldorff, a research manager at SEMI. SEMI projects that more capacity will be added in the second half of 2013 and even more in 2014, for overall capacity growth of about 4 percent.

Earlier last month, SEMI released a similarly optimistic quarterly forecast on light emitting diode wafer fab equipment. The forecast calls for LED wafer fab equipment spending to rise 17 percent to nearly $1.2 billion in 2014, following a 30 percent decline this year and 45 percent decline in 2011.

The LED industry dramatically expanded worldwide capacity over the past three years, partly fueled by lucrative government subsidies in China.

Total worldwide capacity rose 49 percent in 2011 and 39 percent in 2012 and continued to grow by 19 percent this year. Driven by national and provincial subsidy and incentive programs, China LED manufacturing increased from approximately 100,000 4-in equivalent wafers per month in 2010 to 620,000 4-in wafers per month this year, SEMI said.

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