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As a direct follower of the move to 300mm fabs, the lack of new build in 2008 and that expected in 2009 looks set to cause a serious capacity constraint over the next two years as the industry recovers from one of the worst downturns in its history.

In his May, 2009 monthly report, Malcolm Penn at Future Horizons believes the capacity shortage at 300mm fabs will impact the industry as soon as 2010. He claims that only 40,000 200mm wafer starts/week equivalent, minus any capacity closures, will come on stream next year, based on the incredibly low capital spending levels.

That means that demand will outstrip available capacity, creating a period of fab shortages and potentially impacting the next growth cycle.

“Given the significant cutbacks in cap ex since mid-2007, we expect to see utilisation rates trending back to the 90 percent ‘full capacity’ threshold much faster than in previous recessions, accelerating the supply-side recovery dynamics by at least four quarters,” Penn noted in his May report.

I am not so sure 2010 will expose capacity constraint. On the foundry front all of the top players excluding Chartered Semiconductor have multiple fabs that have never been fully utilized and therefore can be equipped relatively quickly as long as spending kicks-in in early 2010 to enable ramps in Q3 to meet seasonal high demand.

As has been the case historically, the relatively long lead times for lithography equipment are the key, so any return to higher bookings from ASML and Nikon in that time frame should either ease or raise concerns about a looming capacity shortage at the foundries.

With the closure of 200mm fabs for DRAM and NAND flash production over the last 12 months, 300mm memory fab utilizations rates should climb pretty fast next year and this could be the first sector to see shortages, especially when 193nm ArF immersion tools would be required to see node migrations at the Tier 2 suppliers get underway.

That said, companies like Toshiba, IMFT and Hynix have new 300mm fabs that have been put on hold as far as NAND flash production expansions are concerned. Being large facilities I doubt shortages would appear in 2010, should these start ramping again.

The big build-out of 300mm fabs in 2005 through 2007 created a significant overcapacity and surely that needs to be burnt through before constraints reappear. However, as Penn himself, would remind people, it takes 12 months to build a fab and two years on average to ramp to full capacity. At some stage, due to the lack of new fab construction and a declining spending regime since mid-2007, shortages in capacity will surface.

Currently, I would expect a new but conservative wave of 300mm fab announcements in the first-half of 2010, too late for stopping shortages in 2011.