Semiconductor Industry CapEx Trends in 2024: A Comprehensive Analysis
Santoshkumar Patil
Program Management / Engineering Leadership / Staff Technical Program Manager at LAM Research / Ex AMAT / Ex GE / IIMK
In the wake of a challenging year for the semiconductor market, characterized by an 8.2% decline in 2023, industry players are treading cautiously with their capital expenditure (#CapEx) plans for 2024. This cautious sentiment follows a 7% decrease in CapEx in 2023 compared to the previous year, totaling $169 billion. Projections suggest a further 2% decline in CapEx for 2024, according to Semiconductor Intelligence estimates.
Despite the overall market downturn, major memory companies are displaying resilience by increasing their CapEx investments in 2024. With the memory market poised for recovery and the emergence of new applications such as Artificial Intelligence (#AI) driving demand, companies like Samsung are maintaining relatively stable spending at $37 billion for the year.
#Micron Technology and #SKHynix, having scaled back CapEx significantly in 2023, are now planning double-digit increases for 2024.
Conversely, Taiwan Semiconductor Manufacturing Company (#TSMC) anticipates a slight reduction in CapEx, aiming to allocate between $28 billion to $32 billion, down 6% from 2023. Meanwhile, #SMIC plans to maintain flat CapEx, while #UMC eyes a 10% increase. #GlobalFoundries expects a notable 61% reduction in CapEx for 2024 but anticipates ramping up investments in the coming years with the construction of a new fab in Malta, New York.
#Intel, with a strategic focus on expanding capacity for both foundry customers and internal products, plans to increase CapEx by 2% to reach $26.2 billion in 2024. Similarly, Texas Instruments (#TI) aims to sustain its CapEx at approximately $5 billion annually through 2026, primarily driven by investments in its new fabs in Sherman, Texas. Conversely, #STMicroelectronics anticipates a 39% reduction in CapEx, while #Infineon Technologies plans a more modest 3% cut.
Notably, the three largest spenders—#Samsung, #TSMC, and #Intel—are projected to account for 57% of the semiconductor industry’s CapEx in 2024, underscoring their pivotal role in shaping industry dynamics.
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The semiconductor market is renowned for its volatility, with historical fluctuations ranging from significant growth to sharp declines. While the industry has matured, recent years have seen fluctuations, including a 26% increase in 2021 and a 12% decrease in 2019.
Future Outlook:
Despite ongoing uncertainties, most forecasts project moderate growth for the semiconductor market in 2024, ranging from 13% to 20%. Semiconductor Intelligence forecasts an 18% growth rate for the year. Should 2024 align with these expectations, companies are likely to adjust their CapEx plans accordingly, potentially heralding a positive shift in semiconductor CapEx trends.
Conclusion
As the semiconductor industry adapts to shifting dynamics following the peak experienced in 2022, strategic CapEx decisions remain critical in navigating the current landscape. By remaining vigilant to market trends and emerging opportunities, companies needs to position themselves effectively amidst the challenges and potential growth avenues in 2024 and beyond.
Big thanks to Bill Jewell for the insightful article capturing the essence of the semiconductor industry in 2024. Your eloquent articulation of market trends is truly appreciated.