Surpluses of certain types of semiconductor components and the weakness of the macroeconomy this year will lead their manufacturers to reduce their production volumes and reduce their own costs of purchasing technological equipment. The latter figure, according to representatives of the SEMI association, will fall by 15% to $84 billion at the end of the year, but will rise by the same 15% to $97 billion next year.
Image source: GlobalFoundries
As industry representatives explain SEMI Association, The increase in hardware costs in 2024 will be driven by the end of the chip inventory adjustment cycle this year and increased demand for components in the high-performance computing segment and memory chips. Two years of the pandemic have pushed the equipment market higher, bringing it to a record capacity of $99.5 billion at the end of 2022, and although 2024 will be marked by an increase in associated costs, it still will not reach capacity reach level of 2022.
Depending on the field of activity, the dynamics of spending on the purchase of equipment is heterogeneous; In the contract manufacturing segment, this year they will even rise by 1% to $ 49 billion, but next year they will rise by another 5% to $ 51.5 billion. In fact, this segment of the industry will account for more than half of the costs for make the purchase of equipment. Notably, cost growth is being fueled by the need to increase chip production volumes for both advanced and mature lithography technologies.
Image source: SEMI
The cyclical nature of the memory market will drive manufacturers’ spending on device purchases next year. If they fall 46% this year, they will rise 65% next year to $27 billion. In the DRAM segment, equipment costs will fall 19% to $11 billion this year, but will rise 40% to $15 billion next year. The magnitude of changes in the NAND segment will be greater; This year, the cost of equipment for producing solid-state memory will fall by 67% to $6 billion, and next year it will rise by 113% to $15 billion to $12.1 billion. The microprocessor segment at the end of the current year will maintain equipment costs at the same level as last year, but next year they will grow by 16% to $ 9 billion.
Geographically, Taiwan will be the leader in volume of equipment purchases next year, rising 4% to $23 billion. South Korea will only be slightly behind at $22 billion, but will already increase equipment costs by 41% compared to the current year. According to SEMI representatives, this is due to the upcoming recovery in storage demand. Against the backdrop of tightening sanctions, China remains in third place with costs of $20 billion, but will reduce this next year compared to the current year.
Both Americas are in fourth place with record costs of $14 billion, up 23%. In Europe and the Middle East, spending on chip production equipment will rise 41.5% to a record $8 billion. Japan and Southeast Asian countries will increase spending to $7 billion and $3 billion, respectively. According to SEMI, available chip production capacity worldwide will increase by 5% this year, although it increased by 8% after last year’s results. Next year the increase will reach 6%.
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