SAN FRANCISCO — Capital spending for memory chips is expected to account for 53% of total industry capex of $102 billion this year, nearly twice the percentage that memory accounted for just five years ago, according to market research firm IC Insights.

With all NAND flash vendors ramping up 3D NAND capacity, NAND-related capital expenditures are forecast to total more than $31 billion, 31% of the semiconductor industry total, according to the latest edition of IC Insights' McClean Report. The total for NAND capex would represent an increase of 13% over 2017, when NAND flash capex grew by 91%.   

Meanwhile, the report forecasts that capital spending for DRAM and SRAM will increase more than any other industry segment, growing 41% in 2018 after an 82% increase last year. DRAM/SRAM capex is expected to total $22.9 billion, 22% of the industry-wide total, according to the report.

Memory's share of capital spending

The forecasted total of $102 billion for the overall semiconductor industry — including both upgrades to existing wafer fab lines and brand new manufacturing facilities — would mark the first time that the semiconductor industry has pumped more than $100 billion into capital expenditures, IC Insights said. The total would represent a 9% increase over 2017, when capital spending increased by 38%, the firm said.   

IC Insights warned that after two years of big increases in capital spending the risk for the industry to overshoot NAND flash market demands is high and growing. Samsung, SK Hynix, Micron, Intel, Toshiba/Western Digital/SanDisk and XMC/Yangtze River Storage Technology are all planning to significantly ramp up 3D NAND flash capacity over the next couple of years, and new Chinese memory startup companies may enter the market, IC Insights said.

"Historical precedent in the memory market shows that too much spending usually leads to overcapacity and subsequent pricing weakness," the firm said in a press statement.

Semiconductor capital expenditure by type

— Dylan McGrath is the editor-in-chief of EE Times.