Capital spending in the semiconductor industry will see its biggest drop since 2008

According to IC Insights data, the capital expenditure of the global semiconductor industry in 2022 will be $181.7 billion, with an annual growth rate of 19%, which is lower than the original scale of $190.4 billion and a growth rate of 24% but still reaches a record level.

Now many chip manufacturers are already reviewing their capital expenditure plans for 2023, IC Insights expects semiconductor industry capital spending in 2023 to see the biggest decline since the 2008 financial crisis, falling 19% to $146.6 billion, down from $153.1 billion in 2021. Due to the collapse of the DRAM market in the second half of this year, coupled with continued weak demand and inventory issues, capital spending in this segment is expected to decline more than the industry average next year, down at least 25%.

The capital expenditure of the semiconductor industry fell by 29% and 40% in 2008 and 2009 respectively, and after the global economy showed signs of a rebound in 2010, it surged by 107%. Although many industry manufacturers are pessimistic about the economic outlook for next year, most of them believe that the demand for products will rebound between 2024 and 2025. Therefore, it is still necessary to appropriately expand production capacity and prepare in advance.

Many U.S. semiconductor suppliers have received government subsidies through the Chips and Science Act. However, IC Insights believes that there will be no additional increase in their capital expenditures in 2023. These companies will use the funds to replace part of the original budget to reduce their own capital expenditures.