Global semiconductor companies will reduce equipment investment by about 10 percent this year to the lowest level in about a decade as the industry is expected to see anemic growth amid flagging high-end smartphone demand and global economic uncertainties due to US-China trade tensions, SEMI said yesterday.
The trade disputes might thwart China’s ambition to expand its semiconductor industry, after Washington charged Chinese chipmaker Fujian Jinhua Integrated Circuit Co (晉華集成電路) with stealing trade secrets from US-based Micron Technology Inc, global industrial association SEMI said.
The global semiconductor industry might see a lower single-digit percentage decline in revenue this year from US$470 billion last year, slipping into the first contraction since 2012, SEMI said, citing a severe correction in memorychip manufacturing.
Sluggish demand for Apple Inc’s iPhones and smartphones from Chinese brands has dampened mobile DRAM demand, SEMI said.
The weakness in server demand, which was a major growth engine for DRAM over the past two years, also contributed to the semiconductor industry’s woes, it said.
DRAM chip prices are expected to drop by a double-digit percentage this quarter and the decline would carry into next quarter, it added.
“The semiconductor industry has entered an inventory correction cycle in the fourth quarter of last year. This should be a short-term weakness, before a pickup in the second half of the year,” SEMI analyst Clerk Tseng (曾瑞榆) told a media briefing.
The short-term correction could cause global semiconductor equipment spending to drop by 10 percent this year from last year, Tseng said.
Last month, SEMI forecast overall equipment spending would fall about 8 percent to US$55.78 billion this year from US$60.52 billion last year.
Memorychip makers are expected to reduce spending the most, with DRAM chipmakers expected to cut 30 percent and NAND Flash chipmakers to reduce 20 percent, SEMI forecast.
“This year’s spending will mark the lowest level since 2007, due primarily to a significant cutback in equipment spending by memorychip makers,” Tseng said.
South Korea, home to memorychip giants Samsung Electronics Co and SK Hynix Inc, would see the steepest spending cut of about 45 percent this year, but it would remain the world’s biggest semiconductor equipment market, Tseng said.
China would also see a reduction of 9 to 10 percent in equipment investment as South Korean firms slow down their capacity expansion there, he said.
Taiwan is expected to buck the downtrend by increasing spending by more than 10 percent, as Micron continues to invest in its local fabs, Tseng added.
Taiwan Semiconductor Manufacturing Co (台積電) last week lowered its capital spending for this year to US$10 billion to US$11 billion, lower than its previous forecast of US$10 billion to US$12 billion.
Despite the reduction, TSMC is still increasing capital spending for advanced 7-nanometer technology, Tseng said.
Intel Corp is also boosting spending on advanced 10-nanometer technology this year, he said.
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