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To: tech101 who wrote (13336)	3/19/2004 12:14:15 AM
From: tech101	Respond to of 13565

Gartner says fab capacity will be tight through '05 Silicon Strategies 03/18/2004, 3:36 PM ET SAN JOSE, Calif.--Semiconductor capacity is not increasing as fast as demand, leading to high fab utilization rates that are expected to continue through 2005, according to a report from Gartner/Dataquest Inc. today (March 18). More fabs are needed by mid 2005 to avoid probable shortages in fab capacity, said Bob Johnson, an analyst with the research firm. "Worldwide semiconductor wafer fab utilization will reach 93.5 percent at the end of the first quarter of 2004--up from 90.9 percent at the end of 2003--as wafer manufacturing increases to keep pace with higher demand for semiconductors," Johnson said in a statement. "High levels of fab utilization are expected to keep rising throughout 2004 and into 2005, and they may result in occasional shortages in specific segments in which capacity lags demand," he said. The utilization rates are driven by higher unit demand for semiconductors, which has reached record levels. By the end of 2003, the three-month average for unit volume had increased 9 percent above the previous high in September 2000, according to World Semiconductor Trade Statistics (WSTS) data. In contrast, at the same time, global semiconductor manufacturing capacity was only 3.5 percent higher than the previous peak in the second quarter of 2001. Semiconductor capacity is not projected to achieve 9 percent growth from the previous peak until the second quarter of 2004, by which time unit demand will have risen further. According to Gartner/Dataquest, production capacity will not catch up with demand until mid-2005; at that point, high utilization rates will moderate slightly, although they will remain high by historical standards. However, new fabs will have to be announced and construction started soon for sufficient capacity to come on line to avoid potential shortages and allocations by mid 2005. "Without these new fabs, wafer manufacturing capacity will get very tight," Johnson said. "There will still be some available empty-shell capacity for further capacity fine-tuning, but it will be spread throughout the industry, and probably not where it will be needed most. If between five and 10 new fabs are announced, and construction is started by the end of the third quarter of 2004, an abnormally tight utilization situation should ease by the end of 2005." siliconstrategies.com