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Asia’s two largest chipmaking nations are expected, once again, to lead the rest of the world in new fab investments in 2022, according to a recent report from industry association SEMI.
Taiwan and South Korea will account for more than half of the $109 billion in expenditures on fab equipment this year.
Global fab equipment spending for front-end facilities is expected to increase 20% year-over-year (YOY) to an all-time high of $109 billion in 2022, marking a third consecutive year of growth following a 42% surge in 2021, according to SEMI’s latest quarterly World Fab Forecast report.
Despite signs of a slowdown in demand for electronics such as smartphones and PCs, the report said fab equipment investment is expected to remain strong in 2023. Chipmakers are racing to meet demand as semiconductor shortages persist for manufacturers of systems ranging from automobiles to arms.
“The global semiconductor equipment industry remains on track to cross the $100 billion threshold for the first time,” said Ajit Manocha, CEO of SEMI. “This historic milestone puts an exclamation point on the current run of unprecedented industry growth.”
Equipment Spending by Region
While chipmakers like Intel, Samsung, and Taiwan Semiconductor Manufacturing Co. (TSMC) have announced projects in North America, Europe, and Japan to help rebuild chip supply chains in those geographies, it will be years before the projects start moving in production tools.
In the meantime, Asia will continue to expand its position as the world’s key chip supplier.
Taiwan is expected to lead fab equipment spending in 2022, increasing investments 52% YoY to $34 billion, followed by South Korea at $25.5 billion, a 7% rise, and China at $17 billion, a 14% drop from its peak last year.
Europe/Mideast is forecast to log record high spending of $9.3 billion this year and, while smaller than outlays in other regions, the number represents a 176% YoY leap. Taiwan, South Korea, and Southeast Asia are expected to continue record-high investments in 2023.
In the Americas, the report shows fab equipment spending reaching $9.3 billion in 2023, a 13% YoY rise following a 19% YoY increase in 2022, with the region retaining its fourth-place ranking both years in worldwide fab equipment spending.
The SEMI report shows the global industry increasing capacity 8% this year after a 7% rise in 2021. Capacity growth is expected to continue in 2023, rising 6%. The fab equipment industry last saw a YoY growth rate of 8% in 2010, when it topped 16 million wafers per month (200 mm equivalents) – nearly half of the 29 million wafers per month (200 mm equivalents) projected for 2023.
Over 85% of equipment spending in 2022 will stem from capacity increases at 158 fabs and production lines, a proportion expected to edge down to 83% next year as 129 fabs and lines add capacity.
As expected, the foundry sector led by TSMC and Samsung , with a share of about 53%, will make the bulk of equipment spending in 2022 and 2023.
Memory makers like Samsung, SK Hynix, and Micron will account for 33% of spending in 2022 and 34% in 2023.
Foundry and memory represent the largest capacity increases.
The SEMI World Fab Forecast report included as part of its survey more than 1,400 chip facilities globally, including 133 fab projects that are soon expected to start production.