IC Insights: Annual semiconductor capital expenditures will exceed $100 billion for the first time, with storage accounting for 53%

Source: The content is translated from IC Insights by Semiconductor Industry Observer, thank you.

According to foreign analysis agency IC Insights, total semiconductor capital expenditures will increase to $102 billion this year, the first time the industry has spent more than $100 billion on capital expenditures in a year. The $102 billion spending level is up 9% from $93.3 billion in 2017 and up 38% from 2016.

As shown in the figure below, more than half of industry capital expenditures are expected to be used for memory production - mainly DRAM and flash memory, and these expenditures include upgrades to existing fab lines and new manufacturing facilities. In total, memory is expected to account for 53% of semiconductor capital expenditures this year.

Data shows that the capital expenditure share of storage equipment has increased significantly in the past six years, almost doubling from 27% (US$14.7 billion) in 2013 to 53% (US$54 billion) of the total industry capital expenditure in 2018. This means that investment in the storage industry has a compound annual growth rate of 30% between 2013 and 2018.

IC Insights also said that after two years of significant increases in capital expenditures, a major looming question is whether the high level of spending will lead to overcapacity and lower prices.

They say historical precedent in the memory market shows that too much spending typically leads to overcapacity and subsequent price weakness. But it appears that Samsung, SK Hynix, Micron, Intel, Toshiba/Western Digital/SanDisk and XMC/Yangtze Memory Technology all plan to significantly increase 3D NAND flash capacity in the next few years (as well as more new Chinese memory startups entering the market).

IC Insights believes that the risk of excessive demand in the 3D NAND flash memory market in the future is high and growing.

Original link: http://www.icinsights.com/news/bulletins/Memory-ICs-To-Account-For-53-Of-Total-2018-Semi-Capex/

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