Semiconductor Equipment Sales Expected to Hit $139 Billion by 2026

A New Era for Semiconductor Manufacturing

Hold onto your hats, tech enthusiasts! The semiconductor industry is gearing up for a record-breaking year. According to SEMI’s latest Year-End Total Semiconductor Equipment Forecast, global sales of semiconductor manufacturing equipment are set to hit a staggering $113 billion in 2024. That’s a solid 6.5% increase from last year! And the growth doesn’t stop there; projections suggest that by 2025, we could see numbers soar to $121 billion, and even $139 billion by 2026. What’s driving this surge? A mix of front-end and back-end segment demand, with investments in artificial intelligence (AI) and the booming market in China playing significant roles.

Understanding the Numbers

SEMI President and CEO Ajit Manocha put it succinctly: “Three consecutive years of projected growth in investments in semiconductor manufacturing reflect the vital role our industry plays in underpinning the global economy and advancing technology innovation.” That’s a mouthful, but it underscores just how crucial semiconductors are to our tech-driven world. The forecast has brightened since July 2024, thanks to stronger-than-expected investments in AI and from China. Isn’t it fascinating how one sector can ripple through the entire economy?

Diving into the Segments

Let’s break it down a bit. The wafer fab equipment (WFE) segment, which includes everything from wafer processing to fab facilities, is projected to grow by 5.4% to $101 billion in 2024. This is an upward revision from the earlier estimate of $98 billion, largely due to ongoing investments in DRAM and high-bandwidth memory (HBM) driven by the AI boom. Plus, China’s significant investments are playing a pivotal role in this expansion. If you’re wondering about the future, WFE sales are expected to continue climbing, reaching $123 billion by 2026.

On the flip side, after two years of downturn, the back-end equipment segment is bouncing back strong, especially in the latter half of 2024. Sales of semiconductor test equipment are expected to rise by 13.8% to $7.1 billion, while assembly and packaging (A&P) equipment sales could jump by a whopping 22.6% to $4.9 billion. This growth is fueled by the increasing complexity of semiconductor devices, especially for high-performance computing and the rising demand in mobile, automotive, and industrial markets.

Applications Driving Sales

When we look at WFE sales by application, Foundry and logic applications are expected to hold steady at $58.6 billion in 2024. However, growth is on the horizon, with projections of a 2.8% increase in 2025 and a leap to $69.3 billion in 2026. This surge will be driven by the demand for technology and new device architectures, including the transition to gate-all-around (GAA) designs.

Memory-related capital expenditures are also set to skyrocket, particularly due to the growing need for HBM in AI applications. While NAND equipment sales might be a bit sluggish in 2024, the forecast suggests a massive rebound in 2025, with a staggering 47.8% growth expected. Meanwhile, DRAM equipment sales are projected to soar by 35.3% in 2024, underscoring the critical role of memory in modern computing.

Regional Insights

Now, let’s talk geography. China, Taiwan, and Korea are expected to remain the top three players in semiconductor equipment spending through 2026. China is set to maintain its lead, with equipment purchases projected to reach a record $49 billion in 2024. Even as other regions might see a dip in spending next year, China is expected to stay resilient, although a contraction is anticipated in 2025 after a spree of investments over the past few years.

All in all, the SEMI forecast is a collaborative effort, drawing insights from leading equipment suppliers and robust data collection programs. As we look ahead, it’s clear that the semiconductor industry is not just surviving; it’s thriving, and it’s exciting to see where this momentum will take us in the coming years. What innovations will emerge from this growth? Only time will tell!

Technology Explained

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Foundry: A foundry is a dedicated manufacturing facility focused on producing semiconductor components like integrated circuits (ICs) for external clients. These foundries are pivotal in the semiconductor industry, providing diverse manufacturing processes and technologies to create chips based on designs from fabless semiconductor firms or other customers. This setup empowers companies to concentrate on innovative design without needing substantial investments in manufacturing infrastructure. Some well-known foundries include TSMC (Taiwan Semiconductor Manufacturing Company), Samsung Foundry, GlobalFoundries, and UMC (United Microelectronics Corporation).

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NAND: NAND technology is a type of non-volatile memory that is used in many computer applications. It is a type of flash memory that is used to store data in a non-volatile manner, meaning that the data is not lost when the power is turned off. NAND technology is used in many computer applications, such as solid-state drives, USB flash drives, digital cameras, and memory cards. It is also used in many embedded systems, such as cell phones, tablets, and other consumer electronics. NAND technology is a reliable and cost-effective way to store data, making it a popular choice for many computer applications.

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