According to the latest data released by IC Insights, a well-known semiconductor analysis agency, the three-year period of 2020-2022 will be the first three-year period of double-digit growth in capital expenditure since 1993-1995.
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IC Insights has adjusted its 2022 forecast for global semiconductor capital spending, which now shows a 21% increase this year to $185.5 billion, as shown below. That’s down from the $190.4 billion forecast at the start of the year and a 24 percent increase. Despite the downgrade, the revised capital spending forecast still represents a new high level of spending.
In the first half of this year, many IDM factories were still well above 90% utilization, and many pure-play foundries were at 100% utilization, as the economic recovery during the epidemic kept orders strong. Combined semiconductor capital spending in 2021 and 2022 is now expected to reach $338.6 billion.
IDMs and foundries are investing heavily in ramping up to manufacture logic and memory devices using leading-edge process technologies. However, strong demand and continued shortages of many other important chips such as power semiconductors, analog ICs, and various MCUs have led suppliers to increase their manufacturing capabilities for these products as well.
While all of this was positive news, soaring inflation and a rapidly slowing global economy led semiconductor makers to reassess their aggressive expansion plans mid-year. Several (but not all) suppliers, notably many of the leading DRAM and flash memory manufacturers, have announced cuts to their capex budgets this year. More suppliers noted that capital spending is expected to be cut in 2023 if capacity needs are assessed as the industry digests three years of strong spending and slowing economic growth.
