Semiconductor spending at an all-time high amid chip shortage

20 Dec 2021

Image: © Edelweiss/

An IC Insights report predicts that semiconductor spending will reach $152bn in 2021 – a new record high.

Chipmakers are ramping up spending on new factories and production equipment amid an ongoing global semiconductor shortage that is not expected to ease any time soon.

There have been record levels of capital expenditure in the global semiconductor industry this year, according to a report by IC Insights, which forecasts spending to reach an all-time high of $152bn in 2021. This is a 34pc increase over last year and the second highest annual increase since a 41pc surge in 2017.

This spending on semiconductors exceeds last year’s record-breaking figure of $113.1bn and shows how manufacturers are dealing with the growing demand for chips.

While there are many reasons that led to the chip shortage, Covid-19 has played a major role in disrupting supply chains and threatening production in a range of industries: computers, game consoles, smartphones, smart TVs, smart watches and even cars.

According to IC Insights, the foundry segment is forecast to account for 35pc of all capital expenditure in the semiconductor industry this year, the highest of all segments. This is driven by rising industry demand for integrated circuits fabricated using advanced process technology nodes.

Taiwan Semiconductor Manufacturing Company (TSMC), which is the world’s largest manufacturing of chips, is forecast to account for 57pc of the $53bn in foundry spending this year, with companies such as Samsung hot on its heels.

Meanwhile China’s largest chipmaker, Semiconductor Manufacturing International Corporation (SMIC), is expected to see its spending drop by 25pc this year to $4.3bn, following a blacklisting at the end of last year by the US government.

“It took 50 years for the semiconductor business to turn into a half a trillion-dollar business. It’s going to take probably eight to 10 years to double. And it’s going to double right after that, probably in four to five years,” Khaldoon Al Mubarak, CEO of Mubadala, recently told CNBC in relation to semiconductor growth.

Mubadala is a state-owned company based in Abu Dhabi that is a major investor in semiconductor maker GlobalFoundries, which recently raised $2.6bn in a Nasdaq IPO to bolster its investments in US manufacturing sites.

Pat Gelsinger of Intel, one of the world’s largest chipmakers in terms of sales, said in the company’s Q2 earnings earlier this year that it would take “another one or two years” before semiconductor supply can catch up with demand. The company is looking to boost manufacturing capacity with major investments in Ireland and around the world.

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Vish Gain is a journalist with Silicon Republic