China May Become No. 2 Fab Spender by 2018

　　China is expected to become the world’s second-largest spender on chip equipment by 2018 as a number of startups in the nation start ramping up new fabs.

　　China will increase overall fab spending, including construction and equipment, by 54 percent annually as the nation’s spending rises from $3.5 billion in 2016 to $5.4 billion in 2017, according to global chip equipment industry association SEMI. By 2018, the figure will jump to $8.6 billion in 2018, according to SEMI.

　　The bullish forecast comes as market research firm Gartner Inc. said it expects semiconductor industry sales to grow 12.3 percent this year, reaching $386 billion. Gartner said favorable market conditions that gained momentum in the second half of 2016 have raised the outlook for the chip market in both 2017 and 2018.

　　During the two-year period covered by the SEMI report, South Korea, Taiwan and China will lead record spending for fab construction and fab equipment, and spending in Europe will also increase significantly. SEMI forecast that in 2017, chipmakers will invest over $49 billion in equipment, a record for the semiconductor industry.

　　Spending on new fab construction is projected to reach over $8 billion, the second largest year on record.

　　Chipmakers will set new records again in 2018, when equipment spending passes $54 billion, and new fab construction spending reaches a new peak at $10 billion, according to SEMI.

　　The spending expectations are driven by a handful of established companies, as well as Chinese startups with large budgets, the SEMI report said.

　　The big spenders in China include Hua Li Microelectronics and Semiconductor Manufacturing International Corp. (SMIC) as well as newcomers like Yangtze Memory Technology, Fujian Jin Hua Semiconductor, Tsinghua Unigroup, Tacoma Semiconductor and Hefei Chang Xin Memory.

　　The SEMI forecast breaks down fab equipment spending by region. South Korea is expected to lead both years of SEMI’s forecast period, with spending of $14.6 billion in 2017 and $15.1 billion in 2018.  In 2017, Taiwan is projected to be the second largest spender on equipment, but China will take over second place in 2018 as it equips new fabs under construction in 2016 and 2017.

　　North America is forecast to come in fourth place, with spending of $5.2 billion in 2017 and $5.5 billion in 2018.  Japan will come in fifth, spending $5.1 billion in 2017 and $5.3 billion in 2018, according to the forecast.

　　Although the Europe/Mideast region is in sixth place with relatively modest investments of $3.8 billion in 2017, spending will jump 71 percent from 2016, and the region will leap another 20 percent in 2018 to $4.6 billion, the SEMI report said.