By Clark Tseng
The semiconductor industry started out quite strong in 2012 but declined rapidly in the second half of the year, resulting in a slight year-over-year decline of 2.7% in worldwide semiconductor sales. On the other hand, worldwide capital equipment market recorded a decline of 15% from $43.5 billion in 2011 to $36.9 billion in 2012 according to the SEMI WWSEMS report. While industry forecasts for semiconductor revenue trend from mid-to-high single digit growth in 2013, overall capital investment this year may remain conservative. SEMI expects a flat to single-digit decline trend this year and a strong recovery in 2014.
For Southeast Asia region, we expect capital equipment investment to bottom out in the first half of 2013, with a mild pickup in the second half followed by a strong recovery in 2014. Overall front-end fab equipment spending is expected to double next year from $810 million in 2013 to $1.62 billion in 2014. Foundry and memory are the two major sectors that invest most in the region. For foundries, GlobalFoundries’ expansion plan at Fab 7 will be completed by mid-2014 while UMC continues to upgrade their Fab 12i capacity to 40nm process.
The memory sector represents an even bigger chunk of investment in the region. The latest SEMI World Fab Forecast data shows that memory is the only sector in the region to see investment growth this year. Other sectors, such as power semiconductor and MEMS are expected to see meaningful recovery in 2014, contributing to the overall growth.
Capacity growth at front-end fab shows 1.7% increase this year, with an expectation of higher growth, 8.2%, in 2014, exceeding overall global capacity growth of 5.2% according to the SEMI World Fab Forecast. The growth will mainly be driven by the Memory sector, specifically from NAND flash capacity as Micron gears up for further expansion at its Singapore NAND flash facility next year plus ongoing capacity conversion from DRAM to NAND flash at Fab 7 (Tech).
Singapore is emerging to become the third-largest NAND flash manufacturing country in the world, following South Korea and Japan, by the end of 2014. The conversion and the expansion projects will drive related semiconductor investment in the region in 2013 and 2014.
For the assembly and test sector, Southeast Asia has long been the focal point of the industry with a large installed capacity from both IDMs and OSATs. This position contributes to the region being the largest packaging materials consumption market in the world, representing a market size of $6.6 billion in 2013 and $6.8 billion in 2014. The region’s back-end equipment investment remains significant with more than $1 billion spending each year throughout 2012 to 2014, accounting for about 17% of worldwide share according to the SEMI WWSEMS.
Aside from manufacturing capacity, the Southeast Asia region is now extending its value proposition to IC design and R&D areas with more joint development projects between multi-national corporations and local institutes. We expect to see a more robust semiconductor ecosystem arise from the region as a result of these endeavors and as companies seek ready access to customers throughout Asia-Pacific and South Asia.
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—Clark Tseng is an analyst with SEMI Taiwan’s Industry Research & Statistics.