The semiconductor shortage may have eased with the global economic slowdown this year, but chipmakers are not letting up in their efforts to boost manufacturing capacity.
A report Monday from the Semiconductor Industry Association is forecasting investment in chip fab equipment to increase by 9% to a record high of $99 billion this year. SEMI’s latest quarterly World Fab Forecast also says chip manufacturing capacity will increase again in 2023, though overall investment will taper off slightly to just $97 billion.
“After achieving a record level in 2022, the global fab equipment market is projected to remain healthy next year driven by new fabs and upgrade activity,” said SEMI President and Chief Executive Ajit Manocha.
The report notes that ASML Holding N.V., the Netherlands-based firm that develops lithography equipment for use in the manufacture of advanced semiconductors, received a record $8.7 billion worth of orders during the second quarter of this year. At the time, ASML said it was seeing “extraordinary demand” for its equipment.
Despite the optimistic tone of the report, it’s worth noting that SEMI had previously said in a second-quarter report that chipmakers would spend $109 million on fab equipment by the end of the year. So chipmakers’ enthusiasm for boosting production capacity has eased somewhat since then.
If chipmakers are scaling back their expansion plans, that would make sense. Some of the industry’s leading players, including Intel Corp. and Nvidia Corp., have recently reported that they’re expecting to see lower demand for their products for the remainder of the fiscal year, cutting back on their financial guidance as a result.
That said, chipmakers are clearly prepared to invest in their businesses anyway. SEMI said global semiconductor manufacturing capacity has already risen 8% this year, after increasing by 7.4% in 2021. The last time the chip fab equipment industry saw such a steep rise in investment was in 2010, when its production capacity hit more than 16 million wafers per month. SEMI says the industry is now expected to achieve a capacity of 29 million wafers per month by the end of 2023, which would suggest a 5.3% year-over-year capacity increase.
In terms of what kinds of chip manufacturing gear the main players are buying, the foundry segment will account for 53% of all spending in both 2022 and 2023, SEMI said. Memory manufacturing will make up 32% of all investment this year, followed by 33% in 2023.
On a regional basis, it’s no surprise to see that Taiwan is leading the way in terms of fab equipment investments, with spending there set to rise by 47% to $30 billion in 2022. Taiwan, which is home to Taiwan Semiconductor Manufacturing Co., is said to account for 48% of the world’s semiconductor manufacturing capacity. When it comes to newer chips made on a 16-nanometer process or lower, Taiwan accounts for 61% of global capacity.
Elsewhere in Asia, chipmakers are showing less enthusiasm to invest in their manufacturing operations. In South Korea, spending is set to decline by 5.5% in 2022 to just $22.2 billion, while China’s spending will fall 11.7% to just $22 billion this year.
Europe and the Middle East will increase spending by 141% this year, to $6.6 billion, though even with this investment its overall chipmaking capacity is dwarfed by other regions.
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