Semiconductor industry capital expenditure predicted to reach $69bn in 2015

Memory and foundry companies combined account for almost two-thirds of 2015 capital expenditure. The three largest spenders (Samsung, TSMC and Intel) add up to half of total capital expenditure. The table below shows capital expenditure for 2014 and projections for 2015. The projections are from Digitimes and Semiconductor Intelligence. Digitimes forecast Samsung will spend $15.1bn in 2015, up 13% from 2014. The midpoint of TSMC's April guidance for 2015 is $10.8bn, up 13%. This is down from TSMC's January guidance of $11.5bn to $12.0bn, up 23% at the midpoint. Intel also reduced its guidance for 2015 capital expenditure from $11bn in January (up 9%) to $8.7bn in April (down 14%).

Overall the listed companies are expected to total $55.7bn in 2015 capital expenditure, up 12% from 2014. Based on IC Insights forecast of $69.0bn for the total semiconductor industry, this leaves $13.3bn for other companies, down 14%. Eight of the nine biggest spenders are either memory companies or foundries. Flash Ventures is a combination of manufacturing joint ventures between Toshiba and SanDisk which account for most of their memory supply. Four of the companies on the list (Infineon, ST, TI and NXP) are top 15 semiconductor suppliers which once depended primarily on internal wafer fabs. These companies are increasing their reliance on foundries and thus their capital expenditure is now rather small relative to their sales. The "others" category largely consists of small to medium size companies producing analogue and discrete semiconductors.

Do current industry conditions justify the strong increase in capital expenditure by the foundry companies? TSMC, UMC and SMIC combined are expected to increase their capital expenditure 17% in 2015. Global Foundries expects $9bn to $10bn in capital expenditure in 2014 and 2015 combined, but did not indicate the amount each year. The capacity utilisation trends of TSMC, SMIC and UMC show high utilisation rates since second quarter 2014 after dips in late 2013. TSMC does not report a utilisation rate. The TSMC utilisation calculated by dividing wafers shipped by wafer capacity results in unrealistic rates above 100%. However the calculated number provides a general trend in TSMC's utilisation.