Burns: iPhone Driving Capital Spending by Memory Makers
Staff -- Semiconductor International, 7/26/2007
With the iPhone driving demand for memories, Strategic Marketing Associates (San Luis Obispo, Calif.) is holding firm on its forecast of a 5% rise in capital spending this year. The turn around in memory prices, especially flash memory, has the momentum to carry capital spending to more than $57B this year, and even higher in 2008, according to the company’s Quarterly Fab Report, released Thursday.
Spending by DRAM and flash manufacturers will increase by more than $5B (20%) and account for 55% of all capital spending in 2007. “Capital spending cuts by a few companies have grabbed headlines recently,” said George Burns, president of the market research firm. However, other companies have increased spending, and the result is “a record level of new fabs coming online in 2008.”
With Apple’s newest product gaining sales traction, Burns said, "I’ve heard reports from flash companies that 25% of all flash this quarter is booked for the iPhone. Flash pricing is going through the roof.”
“It’s a long term trend,” Burns added. “Memory manufacturers are on a roll. In 2002, they accounted for only 22% of capital spending. They’ve increased their share every year since then.”
The report notes that while Qimonda and Micron have announced cuts in capital spending for next year, ProMOS and Powerchip have increased their spending. Taiwan will increase its spending by 46% this year. Foundries, such as TSMC and UMC, are also increasing their spending.
The report forecasts capital spending will grow by 5% this year to more than $57B and again in 2008, surpassing the all-time record for capital spending set at $61B in 2000. “Next year will be a record-setting year for new fabs coming online. They’re going to need a lot of equipment,” Burns said.
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