Covid Economics: 3 Ways OEMs Can Reduce Margin Erosion
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The market for chipmaking equipment is likely to recover next year, energized by China increasing its spending on production gear for memory ICs and other new projects. If China buys as much equipment as anticipated, it will become the world’s largest buyer of fab tools for the first time ever, according to industry organization SEMI.
SEMI expects total spending on equipment in 2020 to rise to $55.8 billion from $52.1 billion this year. The organization is tracking fab projects in China that are expected to move in equipment next year. About 55 percent of those fabs will be for memory.
Once again, Asia is likely to be the main location for investment in new production equipment next year, but this time it will be led by a number of projects in China, as it progresses toward becoming a key chipmaking nation.
“Samsung, SK Hynix and Intel will spend over $5 billion on equipment for memory in China next year,” Clark Tseng, director of Industry Research and Statistics at SEMI, told EE Times. We're currently tracking over $2 billion likely to be spent by Chinese memory suppliers, which translates to about 30% of memory equipment investments in China.”
SEMI forecasts that China, South Korea, and Taiwan will be the top-three markets for chip equipment next year. In 2020, the China market is expected to soar 24 percent from 2019 to $14 billion while South Korea is expected to be the second-largest market at $11.7 billion, followed by Taiwan at $11.5 billion and Japan at $9.0 billion.
More upside is likely if the macroeconomy improves and trade tensions subside in 2020, according to SEMI.
A “mild” recovery in semiconductor manufacturing equipment is likely in 2020, with growth of 1.8 percent, following a decline of 13.5 percent in 2019, according to Dan Hutcheson of VLSIresearch.
“One has to remember that this cycle is mostly a memory boom/bust,” Hutcheson says.
To read the rest of this article, please go to EPSNews sister publication EETimes.
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