Total semiconductor capital expenditures are forecast to rise to US$102.0 billion in 2018, the first time that the industry spends more than US$100 billion on capex in one year, according to IC Insights.

IC Insights' forecast industry spending for 2018 represent a 9% increase over US$93.3 billion spent in 2017, which was a 38% surge over 2016.

More than half of industry capital spending is forecast for memory production - primarily DRAM and flash memory - including upgrades to existing wafer fab lines and brand new manufacturing facilities, IC Insights said. Collectively, memory is forecast to account for 53% of semiconductor capex this year.

The share of capital spending for memory devices has increased substantially in six years, nearly doubling from 27% (US$14.7 billion) in 2013 to a forecast of 53% (US$54.0 billion) of total industry capex in 2018, which amounts to a 2013-2018 CAGR of 30%, IC Insights noted.

Of the major product categories, DRAM/SRAM is forecast to show the largest increase in spending, but flash memory is expected to account for the largest share of capex spending this year, IC Insights indicated. Capital spending for the DRAM/SRAM segment is forecast to show a 41% surge in 2018 after a strong 82% increase in 2017. Capital spending for flash memory is forecast to rise 13% in 2018 after a 91% hike in 2017.

After two years of big increases in capex, a major question looming is whether high levels of spending will lead to overcapacity and a softening of prices. Historical precedent in the memory market shows that too much spending usually leads to overcapacity and subsequent pricing weakness. With Samsung, SK Hynix, Micron, Intel, Toshiba/Western Digital/SanDisk, and XMC/Yangtze River Storage Technology all planning to significantly ramp up 3D NAND flash capacity over the next couple of years, as well as several China-based startup companies entering the market, IC Insights believes that the future risk for overshooting 3D NAND flash market demand is high and growing.