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Samsung, TSMC to see combined capex account for 43% of global semi industry spending in 2021
Jessie Shen, DIGITIMES, Taipei
Thursday 18 March 2021
Samsung Electronics and TSMC will see their combined capex account for as high as 43% of the worldwide semiconductor industry capital spending this year, according to IC Insights' forecast.
Keeping up with producing leading-edge IC technology has become increasingly expensive over the past 25 years. The investment required to implement the most advanced process technologies for logic devices has now driven out all but three companies - Samsung, TSMC and Intel - from the leading-edge portion of the market, IC Insights said.
Samsung and TSMC can truly be considered to be at the leading edge, IC Insights continued, with both in volume production of 7nm and 5nm ICs. In contrast, Intel is not expected to be in high volume production of 7nm devices at its own fabrication facilities until 2022*, at which time Samsung and TSMC will be producing commercial quantities of ICs using 3nm process technologies, IC Insights indicated.
Although Intel has been among the top two leading semiconductor industry capital spenders for 25 out of the past 27 years, the company spent only about half of what Samsung spent in 2020 and is expected to once again fall far short of what both Samsung and TSMC are expected to spend this year, IC Insights said.
Samsung's semiconductor capital spending has remained very strong since 2017 with outlays reaching US$21.6 billion in 2018, US$19.3 billion in 2019, and a massive US$28.1 billion last year, IC Insights said. The sheer magnitude of Samsung's spending over the 2017-2020 period (US$93.2 billion) is unprecedented in the history of the semiconductor industry. Although Samsung has not provided guidance for its 2021 outlays, IC Insights believes the company will keep its spending essentially flat with 2020.
TSMC is the only pure-play foundry to offer leading-edge technology. Most of its current investment is targeting additional capacity for its 7nm and 5nm technologies, IC Insights noted. Illustrating how quickly TSMC moved to more advanced processes, the company's 5nm products represented 8% of its total 2020 sales (US$3.5 billion), after essentially having no 5nm revenue in the first half of last year.
TSMC at its most recent earnings call disclosed the foundry plans to ramp up its capital spending this year to US$25-28 billion, a 60% increase using IC Insights' expectation for US$27.5 billion in outlays by the company. At US$27.5 billion, the company's average quarterly capital spending rate this year would be US$6.9 billion, more than double what the company spent in the fourth quarter of 2020, IC Insights said.
While Samsung began its spending surge in 2017, TSMC will begin what is likely to be a huge multi-year ramp of spending in 2021. Combined, IC Insights expects Samsung and TSMC's capital expenditures will reach at least US$55.5 billion this year and represent an all-time high percentage of total semiconductor industry outlays held by the top two spenders.
Without extremely quick and decisive action by other IC producers or governments, Samsung and TSMC are well on their way to world domination of leading-edge IC process technology, the cornerstone of all of the advanced consumer, business, and military electronic systems of the future. |
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