After a record year in 2022 with over $180bn of investment, the semiconductor equipment market is set to fall by 19% in 2023.
Research by ICinsights is predicting the fall after reducing its forecast for growth in 2022 from 24% to 19%, at $181.7bn, but this is still a record high.
However the slowdown in semiconductor equipment spending that was seen in the second half of the yar will accelerate in 2023, says the company. This is a result of the collapse of the memory market, where capital spending for memory fabs is forecast to decline at least 25% next year.
This clearly shows the cyclical nature of the semiconductor industry where chip makers invest in capacity at times of shortage, but that takes time to become available, creating over-supply and then a reduction in spending.
ICinsights also points to the newly enacted US sanctions on Chinese semiconductor producers, especially those regarding semiconductor production equipment acquisitions from US companies. These sanctions are expected to lead to Chinese company semiconductor industry capital outlays being cut by 30% or more in 2023.
Overall, these two factors are the driving force behind the forecasted -19% drop in total worldwide semiconductor industry spending in 2023 and the steepest decline since the global financial meltdown in 2008-2009.
The $52bn in funding from the recently passed CHIPS Act will not help, it says.
“IC Insights believes that most US semiconductor producers that receive this money will use it to replace what they would have spent if not receiving the grant,” it says in the latest update. “In other words, the CHIPS and Science Act money is not expected to be “additive” funding to planned semiconductor industry spending, but instead is likely to replace the money a semiconductor producer was going to budget if CHIPS and Science Act funding was unavailable.”
This is an issue that the European Union is trying to avoid with its version of the CHIPS Act, stipulating that any funding has to go to new plants.
The 2023 edition of The McClean Report—A Complete Analysis and Forecast of the Semiconductor Industry, will be released in January 2023.
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