A report released on March 1 by research firm IC insights predicts that semiconductor industry capex will increase 24 percent in 2022 to an all-time high of $190.4 billion, up 86 percent from 2019. If the expected figure is met by 2022, it will be the first time for the semiconductor industry to record double-digit growth for three consecutive years since 1993-1995.
The electronics industry was in many cases unprepared for the current rebound in demand as many supply chains were stretched or disrupted during the coronavirus pandemic, the report said. Strong demand has pushed utilisation rates at most manufacturing facilities well above 90 per cent, and even at 100 per cent at many semiconductor foundries. Based on such strong utilization and continued high demand expectations, total semiconductor industry capex is projected to reach $344.3 billion in 2021 and 2022.
IC insights surveyed a sample of 13 companies around the world and predicted that they would increase their capital spending by more than 40% this year. Total spending by the 13 companies rose 62 percent from 2020 to $60.6 billion last year, and is expected to rise 52 percent this year to $91.8 billion, the report said.
Total capex for the 13 companies is now expected to be 2.5 times what it will be in 2020. But most of these semiconductor makers' capital spending is in response to the current surge in demand. In the next few years, many companies are likely to return to pre-COVID-19 levels of capital expenditure as a percentage of sales. The chip boom has fueled the record high capital expenditure of semiconductor companies in recent years, and many companies have also entered the game, starting the journey of "core building". As the market becomes more and more stable, enterprises in the "core" gradually become calm, but also began to layout the long-term development of the future.
Liu Jiping, CEO of Hangshun Chip, told China Electronics News that the shortage of chips in the past two years has made many companies find new business opportunities and increase capital investment. However, true long-term strategic entrepreneurs do not want to see the massive chip shortage and explosion of the past two years, but prefer a steady development. "Chip is a slow-moving technology, and 'cramming' is not a way to achieve long-term development. Chip manufacturers need to work more closely with upstream and downstream manufacturers while deeply cultivating technology, so as to achieve long-term win-win cooperation, rather than just relying on the sudden shortage of chips."
