Reportedly, it is predicted that the semiconductor industry will be going to face or enter in recession in the second half of this year. As it is also expected by analysts that the amount of investment in semiconductor facilities may also be smaller as compared to the previous year.
As per market research firm IC insiders, the global semiconductor industry equipment investment (Capex) is predicted to be $1855 billion this year, which is an increase of 21% year on year.
Although, this is the largest annual semiconductor industry equipment investment ever. But at the same time, it is comparatively less than expected. As previously, the IC insiders in its Q1 report, analysed this year’s investment in equipment in the semiconductor industry will reach $19.4 billion. And this is an increase of 24% year-on-year investment.
Reason behind shrinkage
Added further, the main cause behind the shrinking forecast of equipment investment is the increasing recession around the globe. As consumer demand has shrunk due to the Russian-Ukrainian war. Also, after the global corona pandemic lockdown in China, and also due to supply chain instability such as rising commodity prices continues.
As a result of this all the above reasons, the semiconductor industry is expected to grow at a lower level than previous. Again, the World Semiconductor Trade Statistics Organization (WSTS) has also downgraded its forecast with respect to global this year’s sales of semiconductors. Notably, the previous year’s sales are 16.3% and this year’s prediction is 13.9 %. Whereas there is a drastic gap, in the growth rate forecast of the memory semiconductor market, which is significantly lowered from the previous 18.7% to 8.2%.
Samsung’s statement on global uncertainty
Therefore, as per IC insiders, Inflation and rapid down in the global economy enable semiconductor manufacturers to re-evaluate their plans to expand their facilities. Few suppliers, especially major DRAM and flash memory manufacturers, have already announced a reduction in their equipment investment budget. The same going to expect to cut off spending next year as well.
Samsung Electronics said that “as many macro issues lead to market uncertainty, we will make the memory supply flexible through inventory utilization” and “we intend to operate our short-term facility investment plans with a resilient review to suit this.”
While Samsung Electronics‘ total investment in facilities in the sector in the first half of this year was 17.6 trillion won. Whereas it is less than the first half of the last year which is 20.9 trillion won, and 22.7 trillion won in the second half of the year.