During this year’s Semicon West conference in San Francisco’s Moscone Center, a record-breaking Semiconductor Equipment revenue forecast was released by SEMI. As a material supplier or consumer you might wonder why this is important. History has shown over the past two decades that the equipment makers are the proverbial canary in the economic coal mine of the semiconductor industry. The equipment makers almost always show the quickest and most dramatic reactions to the economic trends in the semiconductor manufacturing industry. And according to SEMI, the equipment manufacturers are set to break in 2017 a record in sales set back in 2000.
In 2000 world-wide (WW) sales of semiconductor manufacturing equipment achieved $47.7B high water mark. SEMI now forecasts $49.4B for 2017, and even further growth in 2018 to $53.2B. Two successive years of record-breaking equipment sales strongly suggests that semiconductor sales will rise and along with that rise, semiconductor material sales should rise as well. The following chart describes the rough correlation between WW semiconductor (fab) equipment and chemicals. One key point is that the equipment forecast is from May of 2017, while the chemical forecast is from one year ago. Thus, the graph not only shows the degree of correlation but suggests that a newer chemical forecast once it becomes available may well bring good news to the electronic materials manufacturers and suppliers for 2H17 and FY18. This point is really made clear when one considers that the average estimate for semiconductor revenue growth in 2017 was 5% in January 2017, but has now been revised up to 12%.
An important point to make about the SEMI forecast is that it is a WW forecast. Forecasts for region such as North America may differ considerably. Consider that Korea as the new WW leader in semiconductor equipment purchases will see a growth in 2017 of 69%, while North America will only see growth of 17%. Indeed, the leaders of equipment purchases are all in Asia: (1) Korea, (2) Taiwan (the former leader for the previous five years), and (3) China. In 2018 China is predicted to reach the number two position moving Taiwan into third place. As in so many areas of manufacturing, China’s growth is astounding; they have grown since 2002 to a predicted 2020 value that is 9X larger.
In any event, it appears the 2H17 and 2018 promise to be strong semiconductor manufacturing years. This bodes well for semiconductor manufacturers, and the chemical and equipment manufacturers that supply them.