Fab Equipment Spending Trends Up

Tuesday January 16, 2018

2017 was a fantastic year for fab investments, showing a 41% growth y-on-y compared to 2016 (SEMI.org).  While growth in 2018 is forecast to slow slightly (10%), it is still higher than the previous CAGR of 2.3% 2011-2016, and foreshadows continued strong growth in fab equipment spending  (est. CAGR of 6% 2016-2021) (SEMI.org).

While many companies have increased their investments in fab equipment spending in 2017 and plan to continue to do so in 2018, the two largest regions for spending increase are Korea, primarily due to investments made by Samsung and SK Hynix, and China.  In fact, Chinese-owned device manufacturers are going to approach parity with their non-Chinese counterparts for the first time, in 2018 in terms of fab spend (Electronics Weekly).  The graph below shows fab equipment spending by region, as reported by SEMI.org.

Korean investment increased by 128% in 2017, and spending is expected to remain elevated in 2018.  Chinese meanwhile has been building many fabs in 2017, and plans to equip these in 2018, which will lead to a large jump in Chinese spending (SEMI.org).

While fab equipment spending will drop down to 8% in 2018, this by no mean signifies a market slowdown.  Indeed, tech giants Intel and Micron Technology will continue to invest in chip fab equipment, driven by IoT and the increased need for consumer level chips in telecoms, automotive, and personal electronics (Barrons).

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