Next year, chip manufacturers will increase their investments in fab equipment by 24 percent YoY to a record 67.7 billion dollars, according to the second-quarter update of Semi’s World Fab Forecast report. In February, the industry association projected an increase to 65.7 billion dollars. This year, however, will mark a second consecutive yearly drop: 4 percent YoY, following an 8 percent YoY dip in 2019.
Looking at recent developments, global fab equipment spending QoQ declined 15 percent in the first quarter of 2020 – a performance that was stronger than the 26 percent decline forecast in February, when the effects of the corona pandemic had not yet been factored in. In March, some companies appeared to build up safety stock as a countermeasure to the spreading virus as shelter-in-place orders emptied offices, malls and schools worldwide.
As the contagion grew, demand for IT and electronic products such as notebooks, game consoles and healthcare applications surged. Some stockpiling is expected to stretch into the second quarter, fueled by fear of restrictions – scheduled to take effect in late June – on semiconductor equipment sold to China. The report predicts rising investments in the second half of 2020, but not enough to stave off the 4 percent contraction for the full year.