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April 21, 2006 BULLETIN

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Billion Dollar Club to Expand to 16 Companies in 2006

Top 10 spenders to represent 58% of total 2006 capital spending!

IC Insights’ research shows that, in 2006, 16 companies are expected to have semiconductor capital outlays of $1.0 billion or more (Figure 1). Collectively, the "billion dollar club" is forecast to account for almost three-fourths (72%) of total semiconductor industry capital spending in 2006.

Illustrating the extremely volatile nature of the semiconductor industry and its spending patterns, just four companies spent over $1.0 billion four years earlier in 2002. Moreover, only Intel, Samsung, and TSMC have been members of the "billion dollar club" every year since 2000.

Figure 1

The top 10 semiconductor industry capital spenders expected for 2006 are shown in Figure 2. These top 10 companies are forecast to register a 10% increase in 2006/2005 spending, matching IC Insights’ forecast for the increase in worldwide capital spending in 2006. It is interesting to note the balanced "regional" mix of the top 10 spenders with two companies each from the U.S., Japan, Europe, South Korea, and Taiwan.

Figure 2

In total, the top 10 capital spenders are forecast to represent 58% of worldwide semiconductor capital spending in 2006, up from 53% in 2002. As shown, each of the top five companies is expected to spend at least $2.4 billion in 2006 and, in total, are forecast to account for 42% of worldwide semiconductor capital spending outlays!

Powerchip, the seventh leading DRAM supplier in 2005, is expected to be one of the most aggressive capital spenders in 2006. As shown in Figure 2, the company was ranked 39th in semiconductor sales in 2005, but is sixth in the 2006 capital spending ranking. Moreover, Powerchip has a 2006-capital-spending/2005-semiconductor-sales ratio of 116%! In contrast, Intel has a 2006-capital-spending/2005-semiconductor-sales ratio of only 19%.

.Hynix should also be considered an aggressive company among the top 10 capital spenders and will likely split its 2006 investment dollars between DRAM and flash memory. In IC Insights’ opinion, the only other company among the top 10 2006 capital spenders that would be considered aggressive is AMD, which will, after the spin-off of its Spansion flash business, concentrate all of its spending on leading-edge MPUs.

About IC Insights

IC Insights, Inc., based in Scottsdale, Arizona, is dedicated to providing high-quality, cost-effective market research for the semiconductor industry. Founded in 1997, IC Insights offers coverage of global economic trends, semiconductor market forecasts, capital spending and fab capacity trends, product market details, and technology trends, as well as complete IC company profiles and evaluations of end-use applications driving demand for ICs.

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