DRAM, flash companies dominate 2006 spending

By Colleen Taylor -- Electronic News, 2/2/2007

DRAM and flash memory companies accounted for 43 percent of all capital spending in 2006, making them the biggest customer of chip equipment makers, according to market research firm Strategic Marketing Associates (SMA).

Furthermore, the firm said that memory manufacturers' share of capital spending will be even higher in the coming year.

"We're out in front of all other forecasters in terms of capital spending growth," SMA President George Burns said in a statement. "Capital spending will be up by 10 percent this year to $60 billion. And the memory companies will lead the way."

SMA is not the only one boasting of DRAM's dominance in 2006. Also this week market research firm DRAM eXchange reported that revenue of the global DRAM brand makers in Q4 grew 16.2 percent from Q3.

SMA's latest quarterly fab report said that 33 new fabs will begin volume production in 2007 -- only 11 of which will be DRAM or flash fabs. "But the DRAM and flash fabs will spend more than $27 billion by the time they are fully equipped," Burns said. "That's two-thirds of the value of all fabs coming online in 2007."

SMA reported that of the seven of the eight memory makers that have so far announced their capital spending plans this year are planning increases.  The one company that has announced a decrease, is market leader Samsung, which nabbed the top spot in DRAMeXchange's latest rankings.  However, SMA said, with the new spending for Samsung's new 300mm fab in Austin,  Samsung's cut in capital spending is only 2 percent.  

All told, announced capital spending plans of the top memory makers are up by almost $4 billion, even including Samsung's small cutback, the firm said. "The memory makers will drive capital spending in 2007," Burns concluded. "The industry may even surpass the previous high water mark of 2000."