Global chip fabrication (fab) equip spending will increase 14 percent in 2018 to $62.8 billion and is expected to rise 7.5 percent to $67.5 billion in 2019, according to semiconductor equipment trade group SEMI.

That’s a big deal as the cost of leading-edge fabs (short for chip fabrication factories) soars above $10 billion and the industry runs into challenges in continuing to advance Moore’s Law, or the doubling of the number of transistors on a chip every couple of years.

SEMI said that 2019 will be the fourth consecutive year of spending growth and the highest investment year for fab equipment in the history of the industry, according to the latest World Fab Forecast Report published today by SEMI. Investments in new fab construction are also nearing a record, with a fourth consecutive year of growth predicted and capital outlays next year approaching $17 billion.

Investments for fab technology and product upgrades, as well as for additional capacity, will grow as the emergence of numerous new fabs significantly increases equipment demand, the forecast shows.

Image Credit: SEMI

The World Fab Forecast Report currently tracks 78 new fabs and lines that have started or will start construction between 2017 to 2020 and will eventually require more $220 billion in fab equipment. Construction spending for these fabs and lines is expected to reach $53 billion during this period.

South Korea is projected to lead other regions in fab equipment investments with $63 billion, just $1 billion more than second-place China. Taiwan is expected to claim the third spot at $40 billon, followed by Japan at $22 billion and the Americas at $15 billion. Europe and Southeast Asia will share sixth place, with investments totaling $8 billion each. About 60 percent of these fabs will serve the memory sector (the lion’s share will be 3D NAND flash memory, for storage in smartphones and data centers), and a third will go to foundry, or contract chip manufacturing.

Of the 78 fab construction projects starting construction between 2017 and 2020, 59 began construction in the first two years (2017 and 2018), while 19 are expected to begin in the last two years (2019 and 2020) of the tracking period.

SEMI said that equipping a new fab typically takes one to one and a half years, though some fabs take two years and others longer, depending on various factors as such the company, fab size, product type, and region. Approximately half of the projected $220 billion will be spent from 2017 and 2020, with less than 10 percent invested in 2017 and 2018, nearly 40 percent in 2019 and 2020, and the rest after 2020.

While the $220 billion estimate is based on current insights of known and announced fab plans, total spending could exceed this level as many companies continue to announce plans for new fabs. Since the publication of the report last quarter, 18 new records — all new fabs — have been added to the forecast.