Chip manufacturing equipment market goes into reverse
Previously SEMI had been forecasting an increase of 7 percent in 2019. Similarly fab investment for 2018 has been revised downward to 10 percent growth from the 14 percent growth predicted in August, according to the latest edition of the World Fab Forecast Report published by SEMI.
SEMI tracks more than 400 wafer fabs and IC production lines with major investment projects and saw a slowdown coming in 2H18 and 1H19. With the latest industry developments a steeper downturn in fab equipment market is now expected (see figure 1). A sequential increase in fab equipment spending is still expected in 2H19.
Figure 1: Fab equipment spending by region including new, used, and company-manufactured fab equipment. Source: World Fab Forecast Report Novermber 2018, SEMI
The main reasons for the adjustment are plunging memory prices and a shift in strategies in response to trade tensions, SEMI said.
Memory makers adjusting capital expenditure budgets and tool orders have been put on hold and as a result memory capital expenditures that were expected to grow by 3 percent in 2019, are now forecast to drop by 19 percent year-over-year (YOY). DRAM is hit the hardest with a fall of 23 percent, while 3D NAND will contract 13 percent in 2019.
Geographically China and Korea have shown the biggest change. Estimates of equipment spending in China in 2019 have been revised from US$17 billion in August to US$12 billion.
SK Hynix is expected to slow DRAM expansion in 2019. GLOBALFOUNDRIES reconsidered its plan for the Chengdu fab, delaying the ramp. SMIC and UMC are slowing spending. The Fujian Jinhua DRAM project has been put on hold.
In August, SEMI forecast that Korea fab equipment spending would decline by 8 percent, to US$17 billion, in 2019 – a projection that has now been slashed to US$12 billion, a drop of 35 percent YoY.
However, Micron is one memory maker that is planning to increase its capex in FY19 – up about 28 percent to US$10.5 billion from US$8.2 billion in FY18.
Other sectors continue to show strength. (Figure 2).
Figure 2: Change rates for chipmaking equipment types by sector. Source: SEMI
Investment in manufacturing of optoelectronics – especially CMOS image sensors – is expected to increase 33 percent to US$3.8 billion in 2019. Microprocessors is expected to grow more than 40 percent in 2019 to US$4.8 billion. Analog and mixed signal investments – up 19 percent – in 2019. The foundry sector is expected to make total fab equipment investments of US$13 billion in 2019, a 10 percent rise.
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