IC Insights is sticking to its current minus 3 percent semiconductor industry capital spending (capex) forecast for 2020, despite the COVID-19 outbreak. Semicon manufacturers are hoping to keep their capex plans intact since the vast majority of the outlays are directed at long-term goals. However, all the risk on this forecast is to the downside and if the outbreak isn’t contained in the first half of this year, significant cuts to current capital spending budgets will likely occur.
The capex decline is expected to be primarily due to cutbacks from the big three memory suppliers – Samsung, SK Hynix and Micron. Their combined spending was 39.7 billion dollars in 2019 and is expected to be 33.6 billion in 2020, a decrease of 15 percent. The other semiconductor manufacturers had combined outlays of 62.6 billion dollars in 2019 and are expected to spend 65.4 billion in 2020, a 4 percent increase.
The largest capex increase in 2019 came from the foundry segment, amounting to a 17 percent jump due to spending by TSMC. It’s expected to again show the largest growth in 2020, with a combined rise of 8 percent. Since 2015, foundry has led the largest amount of capex by product type each year, except for 2018. For 2020, the forecast is 29 percent of semicon industry capital expenditures. Again, this was mostly accounted for by TSMC, increasing its spending by 4.5 billion dollars. In 2020, its spending is expected to be more moderate, rising with 563 million dollars. China-based SMIC is planning to raise its outlays by about 1.1 billion.