Investment Surges in Korea Due to Increased Fab Equipment Investment by Samsung Electronics and SK Hynix

The Semiconductor Equipment and Materials International (SEMI) announced in its World Fab Forecast report that global fab equipment investment in 2017 would reach a record high of 57 billion.

High demand for semiconductors, strong memory prices, and fierce competition are acting as the driving force behind high levels of fab investment, and many companies are making unprecedented investments in the construction of new fabs and fab equipment.

According to World Fab Forecast data, total fab equipment investment in 2017 was $57 billion, a 41% increase from the previous year. Investment in 2018 is expected to increase by 11% to $63 billion.

While many companies, including Intel, Micron, Toshiba (Western Digital), and GlobalFoundries, are increasing their fab investments in 2017 and 2018, the increase in investment is generally concentrated among two companies in one region.

According to SEMI data, the surge in investment is occurring in South Korea, with Samsung being the primary driver, which is expected to increase its fab equipment investment by 128% from $8 billion in 2017 to $18 billion. SK Hynix also increased its fab investment by approximately 70 percent, reaching an all-time high of $5.5 billion. While Samsung and SK Hynix are conducting most of their investments in South Korea, some are expected to be invested in China and the United States. Both Samsung and SK Hynix are expected to maintain high levels of investment in 2018.

In 2018, China is expected to begin introducing equipment into fabs built in 2017. Previously, non-Chinese companies accounted for the majority of fab investments in China. However, for the first time in history, Chinese device manufacturers will approach a level of parity in 2018, investing nearly the same amount in fab equipment as non-Chinese companies. Chinese companies are projected to invest $5.8 billion in 2018, while non-Chinese companies are expected to invest $6.7 billion. Numerous startups, including Yangtze Memory Technology, Fujian Jin Hua, Hua Li Microelectronics, and Hefei Chang Xin Memory, are making large-scale investments in the region.

Record-high equipment investments in 2017 and 2018 demonstrate the growing demand for high-tech devices. These investments followed an unprecedented surge in investment for new fab construction, details regarding construction also covered in the SEMI World Fab Forecast report. With China leading construction investments of $6 billion in 2017 and $6.6 billion in 2018, construction investment is also expected to break all-time records and set a new record. No other region has previously recorded an annual investment of over $6 billion for construction.