IC Insights has revised its outlook for semiconductor industry capital spending to 20% growth in 2017. Spending for the first half of 2017 was already 48% greater than a year ago, according to IC Insights.
Statistics gathered by IC Insights show the steep upward trend of quarterly capital spending in the semiconductor industry since the first quarter of 2016. Although there was a slight pause in the upward trajectory in the first quarter of 2017, the second quarter set a new record for quarterly spending outlays.
IC Insights believes that whether industry-wide capital spending in the second half of 2017 can match the first half of the year is greatly dependent upon the level of Samsung's spending outlays during the six-month period.
Samsung spent a whopping US$11.0 billion in capital outlays for its semiconductor group in the first half of 2017, more than three times what the company spent a year earlier, and only US$300 million less than the company's spending in all of 2016, IC Insights noted. In fact, Samsung's capital expenditures during the first half of 2017 represented 25% of the total semiconductor industry capital spending and 28% of the outlays in the second quarter of 2017.
While the company has publicly reported that it spent US$11.0 billion in capital outlays for its semiconductor division in the first half of 2017 (a US$22 billion annual run-rate), Samsung has been very secretive about revealing its full-year 2017 budget for its semiconductor group, IC Insights said.
In 2012, the year of Samsung's previous first half spending surge before the first half of 2017, the company cut its second half capital outlays by more than 50% from US$8.5 billion in the first half of 2012 to US$3.7 billion in the second half, IC Insights said. It is impossible to tell whether the company will follow the same pattern in 2017.
Samsung's full-year 2017 capital expenditures could range from US$15 billion to US$22 billion, according to IC Insights.
If Samsung spends US$22.0 billion in capital outlays this year, total semiconductor industry capital spending could reach US$85.4 billion, which would represent a 27% increase over the US$67.3 billion the industry spent in 2016, IC Insights said.
It is interesting to note that two of the major spenders, TSMC and Intel, are expected to move in opposite directions with regard to their second-half 2017 capital spending plans, IC Insights said.
TSMC spent about US$6.8 billion in capital outlays in the first half of 2017. If it sticks to its US$10 billion budget this year, which it reiterated in its second quarter results, it would only spend about US$3.2 billion in the second half of the year, less than half its outlays in the first half.
In contrast, Intel spent only about US$4.7 billion in the first half of 2017, leaving the company to spend about US$7.3 billion in the second half of the year in order to reach its stated full-year 2017 spending budget of US$12.0 billion. |