Memory Ics Account For 53% Of Total Semiconductor Capital Expenditures In 2018

IC Insights predicts that total semiconductor capital spending will increase to $102 billion this year, which is the first time the industry has spent more than $100 billion on capital expenditures in a year. This $102 billion spending level is 9% higher than the $93.3 billion in 2017 and 38% higher than 2016.

The chart below shows that more than half of industry capital expenditures are expected to be used for in-memory production – primarily DRAM and flash memory – including upgrades to existing fab lines and new manufacturing facilities. Overall, this year's memory is expected to account for 53% of semiconductor capital expenditures. The share of capital expenditure on storage devices has increased substantially in six years, almost doubling, from 27% ($14.7 billion) in 2013 to 53% ($54 billion) in total industry capital expenditures in 2018, equivalent to 2013. The -2018 compound annual growth rate is 30%.

Among the major product categories shown, DRAM/SRAM spending is expected to increase the most, but flash memory is expected to account for the largest share of capital expenditure this year. Capital expenditures for the DRAM/SRAM sector are expected to grow by 41% in 2018 after a strong 82% increase in 2017. It is expected that the capital expenditure of flash memory in 2017 will increase by 13% after a 91% increase in 2017.

After two years of substantial increase in capital expenditures, one of the most pressing issues is whether high levels of spending will lead to overcapacity and price declines. Historical precedents for the memory market suggest that excessive spending often leads to overcapacity and subsequent price weakness. Samsung, SK Hynix, Micron, Intel, Toshiba/Western Data/SanDisk and XMC/Yangtang storage technologies are all planning to significantly increase 3D NAND flash memory capacity in the next few years (and new Chinese memory startups entering the market), IC Insights believes The risk of high demand for the future 3D NAND flash memory market is high and growing.