IC Insights: Next year semiconductor industry capex will see biggest drop since 2008

Rising inflation and a weak global economy have forced many chipmakers to reduce aggressive expansion plans made when chips were in short supply. Even so, even though the capital expenditure (CapEx) of the semiconductor industry has decreased, according to IC Insights' previous forecast, capital expenditure in 2022 will increase by 19% year-on-year to reach a record high of US$181.7 billion.

But now that companies such as Intel and Micron are reviewing their capital spending plans for 2023, IC Insights has revised its forecast to see the industry spending falling 19% in 2023 to $146.6 billion. IC Insights noted that the 19% year-over-year decline in capital spending was the largest decline since the 2008-2009 global financial crisis.

IC Insights believes that the memory industry will be more affected than the logic industry due to the 25% reduction in capital expenditures of major producers.

However, almost all chipmakers (including logic and memory chips) expect their product demand to rebound in 2024~2025. Therefore, they believe that they need to expand their capacity to meet the demand in this decade. Therefore, in 2024~2025, the capital expenditure of new factories will increase significantly.

Fabs already under construction or equipping, including those in the U.S. by companies such as Intel, Micron, Samsung, TSMC, and Texas Instruments, will come online on time because of the high cost of delaying these projects.

Interestingly, IC Insights believes that funding for U.S. semiconductor suppliers as part of the US CHIPS and Science Act will not provide a significant boost to their spending in 2023, as they will use the funding they will receive to instead of their own money invested in new factories.

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