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Electronics Production | May 15, 2007

300mm, memory to be main<br>growth for Chip fab spending

According to the recently updated FabFutures report released by SEMI, 300 mm fabs and memory are expected to be the main growth drivers for fab spending, and 85 percent of all fab spending will go toward equipping 300mm fabs in 2007.
The reports, refreshed quarterly, provide a comprehensive forecast of fab details such as spending, capacity and technology into the next six quarters. This year, a total of about 23 million 8-inch equivalent wafers of new capacity is added, which represents about 16 percent growth from the previous year. Samsung is the stand-out leading in terms of capacity, followed by Hynix, TSMC, Toshiba, Intel and Micron. The two fastest growing segments are for Memory-type fabs and 300mm fabs in general. Capacity of all Memory-type fabs increased 33 percent from 2006 compared to 51 percent from 2005 to 2006. The total capacity of all 300 mm fabs is expected to
increase by over 50 percent in 2007 over 2006.

These updates reveal that after a strong growth of about 25 percent in 2006 in total spending for equipping fabs, a modest growth of about 3 percent is expected for 2007. The growth for spending on fab construction projects is estimated to be about 4-5 percent this year. However, a strong
recovery of both spending types for fabs equipping and constructing is anticipated in 2008.

In 2007, over 30 major fab construction projects are taking place with over eight billion US dollars spent. Most of the fabs constructed in 2007 will begin production sometime in 2008. Total construction spending is expected to hit the $10 billion mark by end of 2008. Another 30 fabs will
start volume production in 2007. Looking further out into the future, 16 fabs will start volume production in the first three quarters of 2008.

In the two year report timeframe (4Q06 to 3Q08), 85 percent of all fab spending is going toward equipping 300 mm fabs. Looking at 2007, Taiwan and Japan each represent about 20 percent of all spending on equipping fabs, followed by the US and South Korea with about 18 percent each.

In 2007, the greatest level of fab equipment spending is in the Asia- Pacific region, which account for over $20 billion, or 53 percent, excluding Japan. Japan is expected to account for 20 percent in 2007. Although Southeast Asia is one of the smaller regions in terms of spending on fabs, it will gain momentum in new fab investments and will be led by companies such as IM Flash Technologies, Chartered Semiconductor, Tech Semiconductor and now Qimonda, which are all located in Singapore. These fabs will push Singapore from about $1.8 billion of equipment installations in 2007 to about $3 billion in 2008.

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