Good News for Materials Scientists – Semiconductor Record Spending

Fab spending reports show unprecedented high semiconductor equipment sales are being driven by a handful of well-known companies, and also by several new Chinese companies entering the semiconductor marketplace. An increase in overall fab spending (greenfield construction and equipment together) of 54 percent year-over-year (YoY) in China is expected.  Total spending in China rose from $3.5 billion in 2016, to $5.4 billion in 2017, and then is anticipated to be $8.6 billion in 2018, another 60 percent year-over-year (YoY). The demand for Materials Scientists to develop manufacturing processes and engineers to install and maintain the equipment will be huge as well .

Fab Spending is Beyond Silicon Valley

China-based companies such as Hua Li Microelectronics and SMIC (top investors in 2017 and 2018), and newcomers in the space, including Yangtze Memory Technology, Fujian Jin Hua Semiconductor, Tsinghua Unigroup, Tacoma Semiconductor, and Hefei Chang Xin Memory, are adding to the spending surge . 

Most fab forecasts break down spending by region. Korea leads both years of our forecast period, with spending of $14.6 billion in 2017 and $15.1 billion in 2018.  In 2017, Taiwan the second largest spending region on equipment China took over second place in 2018 as it installs the new fabs that were built in 2016 and 2017.  America is in fourth place, projected to spend $5.5 billion in 2018.  Japan is expected to come in fifth,  spending $5.3 billion in 2018.  Although the Europe/Mideast region was in sixth place with modest investments of $3.8 billion in 2017, this was huge growth for the region – 71 percent more than in 2016 Europe is expected to increase spending another 20 percent in 2018 (to $4.6 billion).

Semiconductor Equipment Spending Strong until 2020

Chinese fabs are expected to spend $12 billion in 2018 and, with help from a few major memory and foundry projects, the country’s purchases may exceed $20 billion in both 2019 and 2020. The changing composition of these huge investments is particularly noteworthy. Overseas multinationals such as Samsung, SK Hynix, Intel and Globalfoundries anticipate spending more than the Chinese companies in the first half of the forecast period; however, in the latter half of the forecast, spending by Chinese semiconductor equipment sales are likely to catch up .

Fab spending very likely to be strong beyond 2018.  Record fab construction spending of $10 billion for 2018 means new fabs will need to be equipped at least a year down the road, leading to high expectations for good business beyone the current two-year forecast period from 2018.