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Semiconductor Fab Investment Expected to Sink 14% in 2019
Due to Sluggish Investment in Memory Sector
Semiconductor Fab Investment Expected to Sink 14% in 2019
  • By Kim Eun-jin
  • March 14, 2019, 09:51
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Semiconductor fab investment is forecast to fall 14 percent this year due to a sharper drop in the memory sector investment.

Semiconductor fab investment is forecast to fall 14 percent this year due to sluggish memory investment, which accounts for around half of investment in semiconductor production facilities. However, fab investment is expected to start to pick up from the second half of this year and will hit a record high next year.

These forecasts were released by Semiconductor Equipment and Materials International (SEMI), a global industry association of companies related to semiconductors, on March 13. It analyzed over 1,300 fabs around the world to estimate fab equipment investment. 

Investment in fab equipment would stand at US$53 billion in 2019 and US$67 billion in 2020, the report said. This year's investment volume is US$9 billion (14 percent) less than that of 2018. The main reason for the drop is the start of a slump in the memory market.

In 2017 and 2018, the memory semiconductor sector accounted for about 55 percent of total equipment investment but the report says that it will dip to 45 percent. In the second half of last year, memory equipment investment fell 14 percent from the first half. Memory equipment investment in the first half of 2019 is expected to shrink 36 percent compared to the second half of 2018. Equipment investment is expected to plummet due to the growth of memory inventories and sluggish demand.

But in the second half of this year, demand for memory is expected to rise and investment is forecast to increase 35 percent from the first half. Due to a rebound in memory investment, fab investment is expected to reach US$67 billion in 2020. This is 27 percent more than this year and 8 percent more than 2018 when investment in memory equipment hit an all-time high.

A similar trend will go for the foundry industry (manufacturing on commission), which has the second largest share after the memory industry according to the report. In the first half of this year, investment in foundries will tick up 1 percent from the previous half but in the second half, it will soar 35 percent. The SEMI expects foundries to account for 30 percent of semiconductor fab equipment investment, showing a very slight change from the past