Chip manufacturing equipment market goes into reverse

December 18, 2018 // By Peter Clarke
The twin threats of a cyclical inventory correction and a potential global trade-war have prompted caution at chip manufacturers and SEMI to downgrade its forecast for total fab equipment spending in 2019 to a contraction of 8 percent.

Previously SEMI had been forecasting an increase of 7 percent in 2019. Similarly fab investment for 2018 has been revised downward to 10 percent growth from the 14 percent growth predicted in August, according to the latest edition of the World Fab Forecast Report published by SEMI.

SEMI tracks more than 400 wafer fabs and IC production lines with major investment projects and saw a slowdown coming in 2H18 and 1H19. With the latest industry developments a steeper downturn in fab equipment market is now expected (see figure 1). A sequential increase in fab equipment spending is still expected in 2H19.

Figure 1: Fab equipment spending by region including new, used, and company-manufactured fab equipment. Source: World Fab Forecast Report Novermber 2018, SEMI

The main reasons for the adjustment are plunging memory prices and a shift in strategies in response to trade tensions, SEMI said.

Memory makers adjusting capital expenditure budgets and tool orders have been put on hold and as a result memory capital expenditures that were expected to grow by 3 percent in 2019, are now forecast to drop by 19 percent year-over-year (YOY). DRAM is hit the hardest with a fall of 23 percent, while 3D NAND will contract 13 percent in 2019.

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