Fab boom drives capex to $60B in 2007

By Colleen Taylor -- Electronic News, 1/3/2007

A record-setting number of new fabs will come online in 2007, pushing capital spending to $60 billion this year, the second highest level of spending in the history of the industry, according to Strategic Marketing Associates (SMA).

The market research firm said it expects 29 fabs to come online and begin volume production this year. The value of these fabs when fully equipped will exceed $44 billion, SMA said.  In addition, as many as nine new DRAM fabs will come online in 2007, the firm said, noting that companies like Powerchip, TECH Semiconductor, ProMOS, Samsung, Nanya, Inotera, Hynix and Winbond will all bring new DRAM fabs online.

SMA further expects that $8.5 billion of new microprocessor fabs by Intel and AMD will also come online in 2007, as well as $4.5 billion of new flash memory fabs. 

"Add in almost $4 billion of new foundry fabs," SMA President George Burns said in a statement. "It’s almost inevitable that capital spending will grow this year." 

Burns added that companies like Micron, AMD, TSMC, SanDisk, Inotera and ProMOS have already indicated that they will be budget more in 2007 than in 2006.

"New fabs drive capital spending. In December of 2005, we forecasted capital spending would be up by 12 percent to $51 billion. We were conservative," Burns said. "The actual number turned out to be is 15 percent to $54 billion. We said then the increase in capital spending would be fab driven and it will be fab driven in 2007, as well."

SMA isn't the only firm that is looking confidently at the new year for the chip industry's balance sheets. According to IC Insights, the worldwide semiconductor market will register a double-digit 2006 to 2011 average annual growth rate of 10.1 percent to reach $400 billion in 2011.