Japan semiconductor (chip) manufacturing equipment sales for the fifth consecutive month showed a monthly decrease, monthly sales continued to fall below the 300 billion yen barrier, a new eight-month low.

Semiconductor Manufacturing Equipment Association of Japan (SEAJ) announced statistics on February 24, 2023 Japan chip equipment sales (3-month moving average) of 294,169 million yen, compared with the previous month (January 2023) shrunk 1.9%, the fifth consecutive month showed a monthly decline, monthly sales fell below 300 billion yen for the second consecutive month, a record 8 months (2022, 6 months). Monthly sales fell below the 300 billion yen mark for the second consecutive month, hitting an 8-month low (284,584 million yen since June 2022).

Compared with the same month last year, Japan's chip equipment sales grew slightly by 0.1% in February, showing growth for the 25th time in 26 months.

Cumulative January-February 2023 Japan chip equipment sales of 593.944 billion yen, down 1.1% from the same period last year.

Japan's chip equipment sales exceeded 300 billion yen for the sixth consecutive month from July to December 2022, with sales of 380.9 billion yen in September 2022, a record high for a single month.

Japan's global market share of chip equipment (in terms of sales) reached 30%, second only to the United States as the world's second largest.

SEAJ published a forecast report on January 12, because the United States announced in October last year to strengthen export controls on China's chips, coupled with the DRAM-centric memory market downturn (price decline), resulting in semiconductor manufacturers to be cautious about equipment investment, so the 2022 (April 2022 - March 2023) Japan chip equipment sales (refers to Japanese companies in Japan) Therefore, SEAJ revised downward the sales of Japanese chip equipment (domestic and overseas equipment sales of Japanese companies) to 3,684 billion yen in FY2022 (April 2022-March 2023) from 4,283 billion yen in the previous estimate (July 7, 2022), representing an annual increase of 7.0%.

SEAJ also revised its 2023 (April 2023-March 2024) Japanese chip equipment sales down sharply from the previous estimate of 4 trillion 229.7 billion yen to 3 trillion 449.8 billion yen, an annual decrease of 5.0%, which will be the first time in four years (since FY2019) into contraction.

Japanese chip equipment giant Tokyo Powertech (TEL) announced on February 9, chip front manufacturing equipment (wafer fab equipment; WFE, Wafer Fab Equipment) market is currently in an adjustment situation, but is expected to gradually recover in the second half of 2023, after 2024 semiconductor and WFE market will be strong growth, into further growth phase.

TEL announced on March 20 that the semiconductor market is expected to expand further with the digitization of society, so its manufacturing subsidiary Tokyo Electron Technology Solutions (TETS) will build a new plant in Oshu City, Iwate Prefecture, to increase production of chip manufacturing equipment. The new plant is expected to start construction in the spring of 2024 and will be completed in the fall of 2025 for production.

According to the Japanese media, the new plant will become TEL's No. 7 plant in Oshu City, the introduction of production, TEL's chip equipment capacity in Iwate Prefecture will be expanded to 1.5 times the current, and the future by production optimization measures, the goal of the maximum expansion of production capacity to 2 times.

According to SEMI forecasts, global spending on fab equipment for front-end facilities is expected to decline 22% year-over-year from a record $98 billion in 2022 to $76 billion in 2023. By 2024, it will increase 21% year-on-year to $92 billion to recover lost ground.

SEMI said the decline in 2023 will stem from weak chip demand and increased inventories of consumer and mobile devices. Next year's recovery in fab equipment spending will be driven in part by the end of semiconductor inventory adjustments in 2023 and stronger demand for semiconductors in high-performance computing (HPC) and automotive.

This quarter's SEMI World Fab Forecast Update provides our initial outlook for 2024, highlighting the steady expansion of global fab capacity to support future semiconductor industry growth driven by the automotive and computing sectors and a range of emerging applications," said Ajit Manocha, president and CEO of SEMI. " "The report points to a healthy 21 percent growth in equipment investment next year."

As per the report, Taiwan, China is expected to maintain its leadership position in global fab equipment spending in 2024 with $24.9 billion in investment, up 4.2 percent year-over-year, followed by South Korea at $21 billion, up 41.5 percent year-over-year. While mainland China is expected to rank third in global equipment spending in 2024, U.S. export controls are expected to limit spending in the region to $16 billion, comparable to the region's investment in 2023.

The Americas are expected to remain the fourth largest spending region, with a record $11 billion in investment through 2024, up 23.9 percent year-over-year. Europe and the Middle East are also expected to see record investment next year, with spending increasing 36 percent to $8.2 billion. Spending on fab equipment in Japan and Southeast Asia is expected to increase to $7 billion and $3 billion, respectively, by 2024.

The report also said that, following a 7.2% increase in 2022, the global semiconductor industry this year, capacity growth of 4.8%. Capacity is expected to continue to grow in 2024, up 5.6 percent.

The foundry sector is expected to lead semiconductor expansion in 2023, with investment of $43.4 billion, down 12.1 percent year-over-year, and $48.8 billion in 2024, up 12.4 percent, as more suppliers offer foundry services to increase global capacity. Despite a 44.4% year-over-year decline to $17.1 billion, it is expected to rank second in global spending in 2023, with investment increasing to $28.2 billion next year.

Unlike other segments, analog and power will expand steadily, driven by steady growth in the automotive market, with spending expected to grow 1.3 percent to $9.7 billion in 2023. Investment in the sector is expected to remain flat next year.

The Nihon Keizai Shimbun reported on Feb. 18 that global semiconductor equipment manufacturing companies have seen a significant slowdown in earnings growth. Of the nine major companies, eight will see year-on-year revenue declines or slower growth from January to March 2023 (some in February to April). The reasons for this are stagnant demand due to poor semiconductor market conditions and the impact of U.S. export restrictions on China. On the other hand, share prices of related companies are recovering rapidly based on the view that the negative factors are almost all out. The focus of attention going forward will be on the certainty and strength of the rally during the period of earnings recovery.

American Applied Materials (AMAT) announced data on the 16th that it expects revenue volume from February to April 2023 to be $6 billion to $6.8 billion, down 4% to 9% from the same period a year earlier.

The company's chief financial officer, Bryce Hill, said at a video press conference the same day, "Orders for memory customers have been cancelled or delayed quite a bit." While sales of products for the automotive market are gaining momentum, sales of products for the most advanced logic chips and foundries have weakened.

In the period from October to December 2022 (November to January for AMAT), five of the nine large companies ensured eventual profitability, such as American Panlin Group and Edelman. However, there is a clear tendency for growth to slow down when looking at each company's revenue forecasts for January to March (February to April for AMAT) this year. Six companies, including Panlin Group and Tokyo Electron, are likely to post lower revenue than the same period last year, while Adesto and SCREEN holdings, which are expected to be profitable, will post the lowest profit growth rate in two years.

According to the international semiconductor equipment and materials organization forecast, the world semiconductor equipment market size in 2022 will be 108.5 billion U.S. dollars to refresh the record high, but in 2023 there will be the first negative growth in four years.

One of the reasons is that semiconductor companies are reducing investment. The semiconductor market is rapidly deteriorating as semiconductor users begin to compress the excessive inventory accumulated in the past few years due to weakening demand from smartphones and other terminals and the economic slowdown. Particularly affected by the large memory companies in 2023, equipment investment will be sharply reduced, SK Hynix in South Korea will be more than 50% less than the previous year, the United States Micron Technology is reduced by about 40%.

Export restrictions imposed by the United States on China have also become a heavy burden. Panlin Group predicts that this will have an impact of $2 billion to $2.5 billion on sales in 2023. Demand for equipment from companies outside the U.S. is also declining as equipment investments by Chinese semiconductor companies stagnate. from October to December 2022, Tokyo Electron's share of sales to China was 22%, down about 5 percentage points from the same period a year earlier.

According to Hiroshi Kawamoto, executive director of Tokyo Electron, "If equipment from the U.S. does not come in, it is difficult for Chinese customers to produce. The result is that our equipment can't get in either."