Semiconductor capital spending is on the rise and market leaders continue to make the lion's share of investment, the soon-to-be-released March Update to the 2014 McClean Report reported.
In fact, Samsung, Intel, and TSMC together will account for more than half of total semiconductor industry capex this year, IC Insights reported. Samsung and Intel lead the pack with $11 billion in spending each this year. Over the next three years, will spend $35.3 billion, with about 60% of the total targeting memory production, IC Insights forecasts. By comparison, Intel is forecast to lay out $32.6 billion.
Meanwhile, Taiwan Semiconductor Manufacturing Co. (TSMC) is slated to invest slightly less at $10 billion. Last year, these three companies took a slightly higher 55.5% share of total spending, compared to $51.8% this year.
Among the rest of the top 10 spenders, the majority will spend at least $3.0 billion in 2014 while nine other suppliers are expected to invest $1 billion. Overall, the top 10 spenders are expected to boost overall spending in 2014 over 2013, despite flatline spending in the previous year.
Notably, some organizations are making big increases in spending, after cuts in previous years. SanDisk, for example, cut spending by 28% in 2012 and a lesser 12% in 2013. This year, however, the company is expected to increase spending by 86%, the largest increase among the top 10 spenders on the list. These shifts are part of a bigger pattern in the semiconductor industry. In the past, capacity expansion and fab equipment spending were closely tied, SEMI reported in its SEMI World Fab Forecast released in January. Now, semiconductor makers are spending money to upgrade facilities over spending to build new capacity.
SanDisk provides a real-world example of this phenomenon. "While SanDisk’s capital spending level is expected to be much higher than in 2013, this increased spending is not expected to result in a significant boost to its NAND flash capacity levels," the McLean Report said.
In another hopeful sign, nine out of 10 of the top capital spenders are expected to increase spending in 2014, compared to a figure of three out of 10 for 2013. Outside of the top 10, growth is predicted to be slower, at 3% this year. Last year, though, this group decreased spending by 15%.
— Hailey Lynne McKeefry, , Editor in Chief, UBM's EBN