AI Hardware Market to Reach $15.6 Billion
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Semiconductor capital spending is expected to increase in the second half of 2016, driven by three top spenders – Samsung, TSMC, and Intel, according to IC Insights. This will translate into spending in the positive range after declining by two percent in 2015.
Capital spending in the semiconductor industry is expected to increase by three percent in 2016, with most of the spend occurring in the second half, said IC Insights. Total spending for the top semiconductor capital equipment buyers is projected to be 90 percent higher in the second half of 2016 compared to the first half.
Although Gartner Inc. forecasts a decline of 0.7 percent in worldwide semiconductor capital spending, to reach $64.3 billion, it is up from an estimated two percent decline in its previous quarterly forecast. In addition, Gartner’s senior research analyst David Christensen noted in a previous statement that “…it appears the second half of 2016 may see improved demand.”
Christensen noted that the slowdown in electronic product demand – PCs, tablets, and mobile products – has pushed semiconductor device manufacturers to become more conservative in increasing production.
Like the other analysts, industry association SEMI believes equipment spending will accelerate in the second half. “Spending growth will continue into 2017 driven by foundries, memory (both 3D NAND and DRAM), MPU, power, and investments in China,” said SEMI.
"After a tepid 2015, device manufacturers are beginning to ramp their investments in key industry segments,” said Denny McGuirk, president and CEO of SEMI, in a statement. “We expect capital spending to improve for the remainder of 2016 and into 2017.”
SEMI projects the worldwide semiconductor equipment market will be flat this year and won’t rebound until 2017 when an 11 percent increase is expected. The mid-year edition of the SEMI Capital Equipment Forecast projects that the total semiconductor equipment market will grow one percent in 2016 to reach $36.9 billion, after contracting three percent in 2015.
IC Insights said the top three spenders - Samsung, TSMC, and Intel – will account for 45 percent of the total semiconductor industry spending in 2016.
Here is IC Insight’s look at the big spenders.
- Samsung — The company spent only about $3.4 billion in capital expenditures in 1H16, just 31 percent of its forecasted $11.0 billion full-year 2016 budget.
- TSMC — Its outlays in the first half of 2016 were only $3.4 billion, leaving $6.6 billion to be spent in the second half of this year in order to reach its full-year $10.0 billion budget. This would represent a2H16/1H16 spending increase of 92 percent.
- Intel — Spent just $3.6 billion in 1H16. The company needs to spend $5.9 billion in the second half of this year to reach its current $9.5 billion spending budget, which would be a 2H16/1H16 increase of 61 percent.
However, analysts expect capital spending to contract by 16 percent in the second half of 2016, compared to the first half, for the remainder of semiconductor suppliers. “In total, 2H16 semiconductor industry capital spending is expected to be up 20 percent over 1H16 outlays, setting up a busy period for the semiconductor equipment suppliers through the end of this year,” said IC Insights.
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