Chip capex expected to soar 20%

Samsung's rising capital spending for its semiconductor division will have a direct impact on the industry's growth.

Semiconductor industry capital spending will soar by 20 percent this year, largely driven by Samsung, according to market watcher IC Insights.

The forecast for the industry is in line with an earlier estimation by semiconductor association SEMI for fab equipment sales to jump by 23 percent. The key driver behind strong growth this year has been the memory chip segment.

Semiconductor industry spending rose by 48 percent in the first half of 2017 compared with the same period last year, IC Insights said in a report emailed to EE Times. The increase in capital spending during the second half of 2017 will depend to a large extent on the level of Samsung's outlays during the rest of this year, the report said. Samsung is the world's largest memory chipmaker and has recently become the world's largest chipmaker as well.

"Not only has Samsung Semiconductor been on a tear with regard to its semiconductor sales, surging into the number-one ranking in the second quarter of 2017, but the company has also been on a tremendous capital spending spree for its semiconductor division this year," the IC Insights report said.

Samsung's full-year 2017 capital expenditures could range from $15 billion to $22 billion, according to the report. If Samsung spends $22 billion this year, total semiconductor industry capex could reach $85.4 billion, representing a 27 percent increase over the $67.3 billion the industry spent in 2016, IC Insights said.

Samsung spent $11 billion for its semiconductor group in the first half of 2017, more than three times what the company spent in the first half of 2016 and $300 million short of its total expenditures in 2016, the report noted. Samsung's first-half 2017 capex accounted for 25 percent of overall chip industry expenditures during the same period and 28 percent of total outlays in the second quarter of this year.

While the company has publicly reported the $11 billion capex for its semiconductor division in the first half of this year, Samsung has been very secretive about its full-year 2017 budget for its semiconductor group, IC Insights said.

To read the full article, go to EETimes.