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Semi Manufacturing Spend Informs Supply Chain

As a barometer for the global supply chain, the semiconductor industry remains a solid measurement. Recent figures in this area may have given the electronics industry pause. However, a long view yields better news.

Worldwide semiconductor manufacturing equipment spending is projected to total $34.6 billion in 2013, an 8.5 percent decline from 2012 spending of $37.8 billion, according to Gartner. The decline is linked to reduced 28-nanometer investment associated with demand shifts in the mobile market.

Not surprisingly, an annual forecast from SEMI, the global industry association, released its annual shipment forecast for the semiconductor industry early this month, saying that shipments for 2013 are forecasted to grow at just a single percentage point.

According to SEMI, polished and epitaxial silicon shipments will total 8,876 million square inches in 2013. “Economic uncertainty continues to hamper silicon demand,” said Denny McGuirk, president and CEO of SEMI, in a press release. “We expect 2013 silicon shipment volumes to remain essentially flat when compared to 2012 and increase in 2014 and 2015.”

The news isn't all bad though, especially looking to the future. Said Dean Freeman, research vice president at Gartner, in a press release:

Semiconductor equipment quarterly revenue is beginning to improve, and positive movement in the book-to-bill ratio indicated that spending for equipment will pick up in the remainder of 2013. Looking beyond 2013, we expect that the current economic malaise will have worked its way through the industry, and spending will follow a generally increasing pattern in all sectors throughout the rest of the forecast period.

Gartner predicts that spending will be weighted toward the end of this year. 2014 semiconductor capital spending will increase 14.1 percent, followed by 13.8 percent growth in 2015, Gartner predicts. “In 2013, the wafer fab equipment (WFE) picture is one of continuous quarter-over-quarter growth as major manufacturers come out of a period of high inventories and a generally weak semiconductor market,” Freeman said.

Looking further down the road, a mild decline of 2.8 percent in 2016 will signal natural market cycles, and growth will return the following year, the market research firm believes.

SEMI's annual forecast, meanwhile, predicts that silicon shipments will reach record levels in 2014 and 2015. Polished and epitaxial silicon shipments are predicted to reach 9,230 million square inches in 2014 and 9,684 million square inches in 2015.

Gartner also believes that fab utilization will also increase both in the short and long term. In the first half of this year, utilization hovered in the high-70 percent to low-80 percent range. Early next year, those levels will build to mid-80 percent range.

Clearly, 2013 won't be a record-breaking year in the semiconductor market. The supply chain, however, can look forward to solid gains going forward.

6 comments on “Semi Manufacturing Spend Informs Supply Chain

  1. apek
    October 15, 2013

    Hailey,

                I belive that things would change if current gridlock in Washington with regards to US Debt limit causes downgrade of US credit rating. I expect that any downgrade in US credit rating will spike the interest rates and decrease consumer spending. Hence, It would severely affect the Macro-economy of not just US but Global Semiconductor Industry. With credit downgrade will come stock market sell off…and also possible layoffs at major semiconductor companies in a matter of 6 to 8 months due to stock piling of inventory.

    Apparently these forecasts made do not take these Political gridlock into consideration.

  2. Hailey Lynne McKeefry
    October 16, 2013

    @Apek, certainly this is is a complex topic with many variables. It's interesting to me when I see different reports all pointing in the same direction. WHat goes on in Washington, though, will certainly impact things

  3. MikeDCowan
    October 16, 2013

    Hi Hailey. I think that forward looking global semiconductor sales growth forecasts could / would also be a very relevant barometer of supply chain fortunes especially relevant to OEMs who are the recipients of semiconductors that would populate their products especially due to the pervasiveness of semiconductors in almost every product that is manufactured from semiconductor manufacturing equipment / tools to every product that we use each and every day. To this end the latest Cowan LRA forecasting model's sales growth expectations for 2013 and 2014 came in at 4.3 percent and 5.1 percent, respectively. These sales growth forecast estimates correspond to 2013 and 2014 semiconductor sales of $304.1 billion and 3$19.7 billion, respectively. Details of these latest forecast results can be found at the following URL = http://electronics.wesrch.com/paper-details/docx-EL1SE1J5AUSIV-2013-2014-global-semi-sales-and-yr-o-yr-sales-growth-expectations-per-cowan-lra-forecast-model.

    Mike Cowan, independent semi industry market watcher and developer of the Cowan LRA Model for forecasting global semi sales.

  4. MikeDCowan
    October 16, 2013

    CORRECTION NOTE – 2014 global semi sales should be $319.7 billion (Not 3$19.7, obviously a typo!)

     

    Mike Cowan

  5. Hailey Lynne McKeefry
    October 17, 2013

    @Mike, thanks for the additional stats. I am totally with you–the Internet of Things means that semiconductors are in many, many products. That's only going to get more true. I appreciate your thoughts.

  6. _hm
    October 20, 2013

    Thst is very interesting figures. How will job rate in EE and supply chain will linked to this figure? Little more supply will be good for reduction of device price.

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