Total Capital Expenditure of Top Three Semiconductor Manufacturers to Rise 5.4% YoY for 2016
February 4, 2016 | TrendForceEstimated reading time: 3 minutes
The revenue of the global semiconductor foundry industry is projected to grow by just 2.1% year on year for 2016 on account of slowing end market demand and expanding supply, according to the global market research firm TrendForce. The competition among major semiconductor manufacturers is therefore going to intensify as well. The total capital expenditure (CAPEX) of the three leading manufacturers – Intel, TSMC and Samsung – is estimated to increase by 5.4% annually this year. U.S.-based Intel is projected to increase its CAPEX by 30% year on year to US$9.5 billion. The CAPEX of Taiwan’s TSMC will also reach US$9.5 billion, representing a 17% annual increase. South Korea’s Samsung on the other hand is going to scale back its CAPEX by 15% to US$11.5 billion. TrendForce believes the CAPEX undertaken by these major manufacturers during 2016 will be reflected later in their 2017 revenue results.
TSMC’s main focuses this year are manufacturing R&D, expanding the market for its InFO technology and setting up its Nanjing fab
TrendForce expects TSMC to concentrate on advancing its manufacturing technology as it is the only pure-play foundry among the three dominant manufacturers and does not compete directly with its clients. TSMC will allocate about 70% of its 2016 CAPEX on manufacturing-related R&D, with most of this expenditure going towards developing the 10nm process. This shows that TSMC is resolute in being ahead in the race to achieve 10nm manufacturing. Additionally, investments on the integrated fan-out (InFO) wafer-level packaging will account for 10% of the foundry’s CAPEX. The InFO technology promises thinner, smaller products with improved heat dissipation and of consistent quality. There are already some clients placing orders specifically for InFO, and the demand for this technology is expected to increase in the near future.
TSMC also intends to move closer to the enormous market in China and will be spending a total of US$3 billion on building a 12-inch wafer fab in Nanjing. The company plans to invest US$500 million into the project this year, and larger investments will follow over the next two years. The Nanjing fab is scheduled to be in operation in 2018.
Samsung will give more weight to its semiconductor businesses this year as the outlook on its smartphone business is uncertain
Samsung’s smartphone business during 2015 was impacted by sluggish demand and lack of product differentiation in the market. Consequently, the electronics giant’s smartphone business suffered an annual revenue decline of 2.6% and an annual net profit loss of 20.6%. The company’s semiconductor business on the other hand posted an impressive 20% annual revenue increase for the same year. Memory and large-scale integration (LSI), which made up the two arms of Samsung’s semiconductor business, saw their annual revenues grew by 17% and 27.7% respectively.
TrendForce believes Samsung is going to rapidly branch out to other businesses this year since the outlook on the company’s smartphone business remains negative. In particular, Samsung will redouble its efforts in the foundry service market and develop a more aggressive strategy to get semiconductor orders. Samsung’s 2016 CAPEX is estimated at US$11.5 billion, out of which US$3.5 billion will be allocated to the LSI unit. The company maintains the same level of capital investment on its LSI unit as last year.
Intel plans to retain its manufacturing leadership and expand its memory business
Intel is currently the leader in the 14/16nm manufacturing. However, its dominance in the CPU market since 1995 will be under threat if it is overtaken by TSMC and Samsung in the development of the 10nm technology. The share of R&D in Intel’s 2016 CAPEX has been increased to about US$8 billion as the U.S. chip maker strive to maintain its edge in the manufacturing technology.
Intel has been very active in the data center market as well. Last year, the company introduced 3D-NAND and 3D XPoint technologies that it jointly developed with Micron. Intel also announced that its logic IC fab in Dalian, China, is going to be converted into a NAND Flash plant at a cost of US$2.5 billion. The chip maker will allocate about US$1.5 billion of its total CAPEX for this year to build on the progress it has made on the memory front.
Suggested Items
NEOTech Positions Itself as Microelectronics Industry Leader with High-Technology Investments
05/09/2024 | NEOTechNEOTech, a leading provider of electronic manufacturing services (EMS), design engineering, and supply chain solutions in the high-tech industrial, medical device, and aerospace/defense markets, announces a significant investment in acquiring new Palomar 8100 wire bonder machines, enhancing the company’s positioning as a leader of cutting-edge microelectronics assemblies for mission-critical applications.
MKS’ Atotech, ESI to Participate in CPCA Show
05/09/2024 | MKS’ AtotechMKS’ Atotech, and ESI will participate in the CPCA Show 2024. The show will be held from May 13 to 15, 2024, at the National Exhibition and Convention Center (Shanghai) and will bring together domestic and international manufacturers in the electronic circuit industry.
Dragonfly Energy Announces Breakthrough in Lithium Battery Production: Eliminating Harmful 'Forever Chemicals'
05/09/2024 | Globe NewswireDragonfly Energy Holdings Corp., an industry leader in green energy storage, has made a significant breakthrough in battery manufacturing with the successful production of PFAS-free electrodes in lithium battery cells.
Connect the Dots: Designing for Reality—The Pre-Manufacturing Process
05/08/2024 | Matt Stevenson -- Column: Connect the DotsI have been working with Nolan Johnson on a podcast series about designing PCBs for the reality of manufacturing. By sharing lessons learned over a long career in the PCB industry, we hope to shorten learning curves and help designers produce better boards with less hassle and rework. Episode 2 deals with the electronic pre-manufacturing process. Moving from CAD (computer-aided design) to CAM (computer-aided manufacturing) is a key step in PCB manufacturing. CAM turns digital designs into instructions that machines can use to actually build the PCB.
All Flex Solutions Hires Mike Madetzke as Manager of R&D
05/08/2024 | All Flex SolutionsAll Flex Solutions is very pleased to announce that Mike Madetzke has joined their team as their new Manager of Research and Development.