Last week, the Philadelphia Semiconductor Index suffered its worst weekly decline in more than a year - a drop of nearly 8%. This week, increased investments from South Korean chipmakers sent chip-equipment stocks soaring, with ASML closing at an all-time high.
This investment underscores a sustained wager on semiconductor consumption, especially as global reliance on sophisticated chips grows across sectors from mobile devices to self-driving cars. For equipment suppliers like ASML and Applied Materials, such massive spending ensures a multi-year pipeline of orders. The construction is part of an international competition to establish chip production capabilities, with major economies vying for leadership in a sector critical to modern technology.
The announcement comes amid a global push for semiconductor self-sufficiency. The United States and Europe are also pouring billions into domestic chip fabrication, while South Korea's plan specifically targets memory chip production - where Samsung and SK Hynix dominate - and aims to attract foundry customers. The scale of the investment reflects the industry's belief that demand for chips will continue to outpace supply, driven by artificial intelligence, 5G, and electric vehicles.
This megaproject is not occurring in isolation. The U.S. CHIPS Act allocates $52 billion for domestic semiconductor manufacturing, and the European Chips Act targets €43 billion in public and private investment. Japan is also subsidizing its own chip foundry venture, while Taiwan continues to expand its advanced fabrication capacity.
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The South Korean commitment, however, is the largest single national investment in memory and logic production, signaling an aggressive bet that global chip demand will keep rising for decades. For equipment makers, this competition translates into a flood of orders for lithography, etching, and deposition tools, with lead times stretching well beyond a year.
Furthermore, more analysts turned bullish on chip-equipment makers in June, anticipating that major chip firms would accelerate tool procurement.
UBS on June 10 issued a similar projection, forecasting the chip equipment market to reach $250 billion by 2028 and stating that worries about lithography tool availability are exaggerated. JPMorgan in a June 17 note raised estimates on the market size.
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