By Christian Gregor Dieseldorff, director, SEMI Industry Research & Statistics, San Jose, CA USA  

Despite difficult times, growing demand for mobile devices (such as tablets and phones) inspires an improved outlook for chip sales in 2013.  Various forecasts range from 4% to 16% revenue growth for 2013 (average of forecasts 7%). As observed in the past, chip sales and capex typically ride the same roller coaster; however, 2013 appears to be another year of uncertainty. While chip sales may rise in 2013, expectations for equipment range from timid 5% growth down to double-digit decreases — definitely not the same roller coaster.

The largest spenders on fab equipment are Samsung, TSMC and Intel.  As of mid-December 2012, some of these companies still have not made any official announcement about 2013 capex plans.

The SEMI Consensus Forecast and the SEMI World Fab Forecast, with data collected from two different methodologies, point to the same conclusion.  The year-end Consensus Forecast for wafer processing predicts 0% growth (flat) for 2013.  Meanwhile, the World Fab Forecast report for Front End Fabs (published November 2012) also shows 0% growth (flat) for 2013 and total fab equipment spending hovering at US$ 32.4 billion (including Discretes and LEDs, used equipment and in-house equipment).  The projected number of facilities equipping will drop, from 212 in 2012 to 182 in 2013. Fab equipment spending saw a drastic dip in 2H12 and, accounting for seasonal weakness and near-term uncertainty, will be even lower in 1Q13.  Examining equipment spending by product type, System LSI is expected to lag in 2013. Spending for Flash declined rapidly in 2H12 (by over 40%) but is expected to pick up by 2H13. The foundry sector is also expected to increase in 2013, led by major player TSMC, as well as Samsung, Globalfoundries and UMC.

While fab construction spending slowed in 2012, at -15%, SEMI data projects an increase of 3.7% in 2013 (from $5.6 billion in 2012 to $5.8 billion in 2013).  The World Fab Forecast tracks 34 fab construction projects for 2013 (down from 51 in 2012).  An additional 10 new construction projects (with various probabilities) may start in 2013. The largest increase for construction spending in 2013 is expected to be for dedicated foundries and Flash-related facilities.

In 2012, many device manufacturers stopped adding new capacity due to declining average selling prices and high inventories. This is most pronounced in the Flash sector, as seen with Sandisk since the beginning of 2012, and both Samsung and Toshiba starting 3Q12.

Breaking down the industry by product type, capacity growth for System LSI is expected to decrease in 2013. Flash capacity additions dragged in 2H12. But more activity is expected for Flash by mid-2013, with nearly 6% growth. The data also point to a rapid increase of installed capacity for new technology nodes, not only for 28nm but also from 24nm to 18nm and first ramps for 17nm to 13nm in 2013.

If the global economy and GDP begin to improve, and chip sales actually do increase in the higher single-digit range, equipment spending is expected to ride the same roller coaster, going even higher for 2013.