2H16 spending surge expected from Samsung, TSMC & Intel

In total, IC Insights forecasts that semiconductor industry capital spending will increase by only 3% this year after declining by 2% in 2015. However, driven by the top three spenders - Samsung, TSMC and Intel - capital spending in 2016 is expected to be heavily skewed toward the second half of this year. Figure 1 shows that the combined 2016 outlays for the top three semiconductor industry spenders are forecast to be 90% higher in the second half of this year as compared to the first half.

Figure 1 - 2016 capital spending forecast (1H16 vs 2H16)

Combined, the “Big 3” spenders are forecast to represent 45% of the total semiconductor industry outlays this year. An overview of each company’s actual 1H16 spending and their 2H16 spending outlook is shown below.

Samsung: The company spent only about $3.4bn in capital expenditures in 1H16, just 31% of its forecasted $11.0bn full-year 2016 budget.

TSMC: Its outlays in the first half of 2016 were only $3.4bn, leaving $6.6bn to be spent in the second half of this year in order to reach its full-year $10.0bn budget. This would represent a 2H16/1H16 spending increase of 92%.

Intel: Spent just $3.6bn in 1H16. The company needs to spend $5.9bn in the second half of this year to reach its current $9.5bn spending budget, which would be a 2H16/1H16 increase of 61%.

In contrast to the “Big 3” spenders, capital outlays by the rest of the semiconductor suppliers are forecast to shrink by 16% in the second half of this year as compared to the first half. In total, 2H16 semiconductor industry capital spending is expected to be up 20% over 1H16 outlays, setting up a busy period for the semiconductor equipment suppliers through the end of this year.

Further trends and analysis relating to semiconductor capital spending through 2020 are covered in the 250-plus-page Mid-Year Update to the 2016 edition of The McClean Report.