The back-and-forth on the macro-economic situation just won't end, but despite the two steps forward, one step back we continue to see, the trajectory is still forward. The positive sentiment seems to be more pervasive though, iSuppli reports there are positive inventory increases for some products from upstream (it's not that people are not buying, rather upstream is feeling more confident about production); there is a new onslaught of consumer electronic (CE) devices hitting the market and set to continue through the industry's traditional peak 3Q; and the reports of fab spending continue to be released.
According to Manufacturing.net, "Samsung Electronics Co. said it is spending $1.9 billion to build a new logic chip factory in South Korea to capitalize on demand for mobile devices." The line is scheduled to be in operation before the end of 2013, according to the same report.
On the larger scale, SEMI recently released its end-of-May 2012 report on global fab equipment spending which happily required an upward revision from the original forecast of 0% growth to 2% growth, US $39.5 billion, year-over-year (YoY) for 2012 fab spending. Consider also April 2012's book-to-bill data for semi equipment purchases, as contextualized in our recent Commentary post.
2013, however, holds even greater growth prospects, and is presently on track, based on CAPEX statements and in progress investments, to reach a record level of US$46.3 billion, or 17% YoY growth from 2012, assuming no intervening macro-economic events, as SEMI rightfully points out.
SEMI also breaks down the regional and product divisions comprising the forecasted increase, showing South Korea to lead in the number and financial amount of investments in 2013, followed by the US, Taiwan, Japan, and China. On the product side, SEMI offers the following summary (see SEMI's report for a detailed discussion):
All product types are increasing equipment spending in 2012. The largest increase seen in 2012 is for Memory and Foundry. Some of the System LSI is moving from Logic/IDM to Foundry which causes spending for Logic/IDM to taper off a bit. Although Intel plans historic high capex in 2012, Front End equipment spending for MPU is not expected to increase much in 2012.
In summary, we expect 2012 to be a much better year for fab equipment spending with most product segments to begin to move into positive growth rates. With many new fabs beginning construction, equipment spending for 2013 is expected to be an all-time record year. Growth rate of capacity is slowing below 4 percent in 2012, but is expected to pick up to about 7 percent in 2013 as newly installed capacity comes online.
Downstream, SIA also released their semiconductor sales data for April, showing a 3.4% month-over-month (MoM) increase in global sales on a three month moving average (3MMA), which SIA notes is the largest MoM increase since May 2010. However, SIA notes that the YoY comparisons show a 5.9% decrease from the same period last year. Despite this YoY decline, and with the caveat of barring negative macro-economic events, the build up of sales moves the forecast for 2013 and 2014 global semiconductor sales well into positive territory, 7.2% for 2013 and 4.4% for 2014, citing the WSTS report:
Beyond 2012, the industry is expected to grow at a significantly faster pace across all regions, according to the WSTS forecast. WSTS predicts 7.2 percent growth globally for 2013 ($322 billion in total sales) and 4.4 percent growth for 2014 ($337 billion).
In sum, between the individual data bits that we are seeing from various fabs, OEMs, manufacturers and hubs, while 2012 continues the bumpy ride, overall, we are continuing to move forward and with enough momentum that upward revisions for 2012 growth in volume and sales are real news. Importantly, we are on the climb uphill for growth for at least the next couple of years, as further confirmed by global data sets with historical depth, such as those from SEMI and SIA in conjunction with industry and financial analysts' reports. This is good news as we head into a busy product summer for automotive (see our post last week), ultrabooks, tablets/phablets and new smartphones.