Both Samsung Electronics and SK Hynix are making huge investments to keep way ahead of the others in the global semiconductor industry. The two companies’ combined capital expenditure for this year is close to half of that of the global top five and one-third of the total capital expenditure in the industry.
According to market research firm IC Insights, Samsung Electronics’ capex is likely to exceed US$20 billion for two years in a row. The company’s annual capex, which was less than US$20 billion from 2010 to 2016, jumped to US$24.2 billion last year and is estimated to reach US$22.6 billion this year. For reference, the combined capex of Intel and TSMC for 2017 and 2018 is US$48.4 billion.
SK Hynix boosted its capex by 58% to US$12.8 billion this year to show the highest capex growth rate in the industry. Its investment is expected to be concentrated on its M15 Plant in Cheongju, South Korea and its plant in Wuxi, China. The former was completed in October this year and will be put into operation in the near future. The plant in Wuxi starts mass production in the second quarter of 2019.
The capex of Micron Technology, in the meantime, totaled US$9.9 billion this year with a year-on-year growth of 54%. Intel’s increased 32% to US$15.5 billion. This year’s total semiconductor industry capex is estimated at US$107.1 billion, up 15% from a year earlier. That of the top five in the industry is estimated at US$71.1 billion.
The investment is predicted to fall 10% next year. This is because the major players are going to reduce their investments without exception with a recession around the corner. “The prices of main items such as DRAM and NAND flash are likely to continue to fall from late this year to next year to affect those companies’ investment,” said an industry insider.