SEMI's Outlook - Fab Investments, Equipment and Materials ForecastsSEMICON Korea Press ConferenceJanuary 2018Dan Tracy, Sr. DirectorSEMI Industry Research & Statistics

Agenda

• 2017 Wrap Up

• 2018 Semiconductor Outlook and Drivers

• Investments and Spending Forecasts

• Summary

2017 Wrap Up

2017- A Record Setting Year

Images from SEMICON Korea 2017

• 2017 is a record setting year for the industry– Semiconductor sales: >$400B for the first time– Fabless sales reach the $100B mark for the first time

– Investments• All-time high for CAPEX by single company (Samsung)• Equipment spending in Korea soars pass previous

regional spending record• Worldwide equipment billings: ~$56B

– Silicon shipments• Also, a rebound in wafer pricing

Top Ten Semiconductor Sales Leaders

2016 Rank

2017 Rank Company

2016 Sales(US$ Billion)

Preliminary2017 Sales

(US$ Billion)2 1 Samsung 44.3 65.61 2 Intel 57.0 61.03 3 TSMC1 --- ---6 4 SK Hynix --- ---7 5 Micron Technology --- ---5 6 Broadcom2,3 --- ---4 7 Qualcomm2 --- ---8 8 Texas Instruments --- ---9 9 Toshiba --- ---16 10 Nvidia2 --- ---

WW Total $365.6 $438.5

Source: IC Insights, The McClean Report 2018

Industry GrowthDRAM up 74%NAND up 44%

1. Foundry; 2 Fabless; 3 Includes acquired company sales for all of 2016 and 2017

2018 Outlook and Drivers

2018 Semiconductor Forecasts

Semico Research (Nov 17), 4.5%

Cowan LRA (Jan 18), 5.9%

WSTS (Nov 17), 7.0%

IHS Markit (Jan 18), 7.4%

Gartner (Jan 18), 7.5%

VLSI Research (Jan 18), 7.7%

IC Insights (Nov 17), 8.0%

Future Horizons (Jan 18), 21.1%

0% 5% 10% 15% 20% 25%

Source: SEMI January 2018

8.0%

-1.0%

3.0%

20.0%

8%

6%

-5%

0%

5%

10%

15%

20%

25%

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2014 2015 2016 2017F 2018F 2019F

Annu

al G

row

th(%

)

Sem

icon

duct

or R

even

ue($

US

Billio

n)

Semiconductor Revenue Annual Growth

Semiconductor Cycles-Revenues to reach $500 billion by 2019

Source: IC Insights McClean Report, January 2018

Semiconductors are pervasive

• Key drivers in 2018 are high-performance computing, IoT,and automotive

Semiconductor Revenue Outlook Beyond 2018

-4%

-2%

0%

2%

4%

6%

8%

10%

WSTS IC Insights Gartner IHS Markit AlphaOne Capital Partners

2020

Source: SEMI January 2018

2018 2019

Industry Trends and Growth Drivers

• Data Centers– Big Digital SoCs– Storage – Solid State Memory

• Gateways– Data Collection Hubs

• IoT Nodes– Sensors– Actuators– Imagers– Transmitters

Source: Mentor, A Siemens Business, presented at ISS US January 2018Source: IHS Markit, presented at ISS US January 2018

Source: VLSI Research, presented at ISS US January 2018

Investments and Spending Forecasts

Key Fab Projects –Driven by NAND, DRAM and Foundry

NAND• Samsung Pyeongtaek P1 • SK Hynix M14 3D NAND line• Micron Building 60 (Lehi) and Fab 10X in Singapore• Toshiba/Flash Alliance Fab 2, Fab 6 and new R&D Center• Intel Fab 68 in China

DRAM• Samsung Pyeongtaek P1 and Line 15• Micron Fab 15 (Hiroshima) and Fab 16• SK Hynix M14

Foundry• TSMC Fab 12, Fab 14 and Fab 15• Samsung S2 and S3• GLOBALFOUNDRIES Fab 1, Fab 8 and Fab 11 • SMIC Beijing B2 and B3, new Shanghai 300mm fab and

Shenzhen 300mm fab• UMC Fab 12A P5 and Xiamen fab

$0

$5

$10

$15

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$25

NAND DRAM Foundry

US$

Billi

on

Fab Equipment Spending

2016 2017F 2018F

Source: SEMI World Fab Forecast, December 2017

Fab Investments-Growth is likely to continue beyond this year

Samsung

KEY CHINA PROJECTS

2018Intel Fab 68 Phase 2TSMC Nanjing Phase 1Hua Li Fab 2Fujian Jin Hua - DRAM

2019/2020Tsinghua Unigroup (Nanjing)and Yangtze Memory Technology (Wuhan)Samsung Xian phase 2SK Hynix C3GlobalFoundries ChengduSMIC Beijing B3 and new Shanghai fab Hefei Chang Xin Memory

2014 2015 2016 2017F 2018FChina 4.37 4.90 6.46 7.59 11.33Europe 2.38 1.94 2.18 3.43 3.79Japan 4.18 5.49 4.63 6.02 6.24Korea 6.84 7.47 7.69 17.89 16.88North America 8.16 5.12 4.49 5.57 7.38SEA/ROW 2.15 1.97 3.55 2.81 3.23Taiwan 9.41 9.64 12.23 12.62 11.25

$0

$10

$20

$30

$40

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$70U

S$ B

illion

Taiwan SEA/ROW North America Korea Japan Europe China

$36.53$41.23

$55.93

$37.50

$60.10

SEMI® Year-End 2017 Equipment Forecast-By Market Region

Source: SEMI December 2017

New equipment. Totals may not add due to rounding

• Korea- record spending year for any region

• Previous spending highs:• $12.9B N. America (2000)• $12.2B Taiwan (2016)

Semiconductor Materials Markets-8% Revenue Growth in 2017; 3% Growth Forecasted for 2018

China16%

Europe7%

Japan15%

South Korea16%

North America

11%

SEA/ROW13%

Taiwan22%

2016 = $43.7 billion

Region 2017F$US B

2018F$US B

China $7.71 $8.16Europe 3.35 3.46Japan 7.03 7.15South Korea 7.48 7.87North America 5.27 5.38SEA/ROW 5.89 6.01Taiwan 10.57 10.86

Total $47.3 $48.9

Source: SEMI Materials Market Data Subscription, January 2018Totals may not add due to rounding

Includes both Fab and Packaging Materials

Summary

South Korea- 2018 Market Highlights2018 Outlook

Installed 300mm Capacity Largest share globally (30% share)

Memory Largest market share globally >55% of the worldwide memory capacity

Total Fab Investments(Equipment, Construction, Facilities)

In Korea: $23 billionIn China: $3.5 billion

TechnologyNAND: ramping 64L/72LDRAM: investing in 1X/1Y nodeEUV installation beginning for 7nm

Semiconductor Materials ~$7.9 billion

Total Semiconductor Equipment Approaching $17 billion; Will remain the #1 spending region on fab equipment

Source: SEMI World Fab Forecast, WWSEMS, & MMDS

Summary

• 2017 a record setting year for the industry– Semiconductor revenues– Fab investments; All-time high for total equipment spending– Equipment spending in Korea smashes previous regional spending record– Silicon shipments

• Record breaking to continue in 2018– Samsung and SK Hynix maintain strong investment levels

• Long-term semiconductor industry outlook is positive due to connectivity and data-centric applications

– High-performance computing (AI, AR/VR)– Data centers– Automotive/Transportation– IOT– Sensor networks