Total MOS fab capacity is expected to reach 95.2 million 200mm equivalent wafers in 2006, which will be 14% greater than 83.7 million wafers in 2005 (Figure 1). In 2000, total MOS fab capacity surged 24% to nearly 61 million 200mm-equivalent wafers---an addition of 11.7 million wafers from the prior year. This sharp increase and a downturn in market demand during 2001 resulted in the worst semiconductor recession in history.

Figure 1

This time, however, capacity increases have been relatively moderate and spread out over several years, reflecting greater caution among integrated circuit manufacturers, IC Insights believes. In the boom year of 2004, for example, the IC industry added only 10% to the installed MOS capacity base. This was followed by an 11% increase in 2005.

Capacity utilization has also been relatively stable and is expected to be 90.1% of the installed based in 2006, compared to 89.7% in 2005 and 92.2% in 2004. In 2000, the IC industry ran at 95.3% of installed MOS fab capacity, but then the bottom fell out in 2001 with utilization dropping to 71.9%. IC Insights' database and forecast shows the industry averaging 88% capacity utilization in the 1994-2010 timeframe.

While this year's increase in MOS capacity is not high enough to cause a significant overbuilding of worldwide capacity, it is high enough to restrain an increase in IC average selling prices (especially MOS memory) into, and possibly throughout, 2007.

Details about IC Insights' updated forecast and what's expected for 2007 and beyond will be presented at the market research firm's annual Fall IC Industry Forum on Thursday, September 21, at the Radisson Inn Sunnyvale in California. To attend the event, IC Insights clients pay just $195; others, $295. visit http://www.icinsights.com/events/fallforum/fallforum.html.