Semiconductor capex takes a nose dive in 2023

A weak memory market and US export restrictions to China are dragging down semiconductor capital spending, says IC Insights. The market research firm predicts a 19 percent capex drop in 2023, the largest decline since the 2008-2009 global financial meltdown.

At the start of this year, semiconductor suppliers were enjoying a strong influx of orders due to robust post-Covid-19 economic activity. Booming demand pushed most wafer fab utilization rates well above 90 percent. Many semiconductor foundries operated at 100 percent utilization. Capital spending budgets for 2022 were set in place to reflect the strong ongoing demand.

Halfway into the year, however, that outlook abruptly changed. Soaring inflation quickly slowed the global economy, forcing many semiconductor manufacturers to reduce their aggressive expansion plans. As a result, IC Insights revised its 2022 worldwide semiconductor capital spending forecast to show a 19 percent increase this year to 181.7 billion dollars, down from an initially forecasted 24 percent growth. Though lowered from the initial outlook, the revised capex forecast will still amount to a new spending record.