Memory manufacturers enjoy strong pricing environment, setting stage for renewed spending growth
Worldwide semiconductor capital spending is projected to total $64.5 billion in 2014, an increase of 11.4 percent from 2013 spending of $57.8 billion, according to Gartner, Inc. Capital equipment spending will increase 17.1 percent in 2014, driven by strong memory average selling prices and increased demand for consumer products.
For 2014, Gartner’s forecast for semiconductor equipment has been increased slightly from the previous forecast. Longer term, Gartner expects modest growth through the semiconductor cycle, with just a modest pause in the equipment market expected in 2016.
“While capital spending outperformed equipment spending in 2013, the reverse will hold true for 2014,” said David Christensen, senior research analyst at Gartner. “Total capital spending will grow 11.4 percent in 2014, compared with 7.1 percent in our prior forecast — a result of Samsung increasing its announced spending plans to $14 billion. Equipment spending will increase 17.1 percent, as manufacturers pull back on new fab construction and concentrate on ramping up new capacity instead.”
In recent years, the equipment industry has realized significant consolidation, as major vendors have acquired complementary and competitive companies. As equipment advancements will lead to higher development costs, the trend of industry consolidation should be expected to continue.
Foundries will continue to outspend the logic integrated device manufacturers (IDMs) in 2014. Foundry spending is expected to increase by 4.5 percent in contrast with the 0.3 percent decrease in total logic spending. However, the longer-term outlook for total foundry spending shows a flat profile, as predicted mobility market saturation will dampen the need for new foundry capacity and creates an environment where existing capacity is upgraded to the latest node. The memory capital expenditure (capex) outlook remains strong for 2014 with a 40 percent increase anticipated in the current forecast, compared with a 25 percent increase in the previous quarter’s forecast. Memory manufacturers are currently enjoying a strong pricing environment, which sets the stage for renewed spending growth.
