As we've been saying since 2007 here at Smith's MarketWatch, a critical variable to keep an eye on is what's happening upstream at the fabs and foundries. As IC Insights echoes, the lack of CAPEX spend over the past 12-18 months coupled with the number of shuttered lines and fabs due to scaling back and insolvencies, respectively, helped to clear the inventory supply chain, but these reductions now pose a potential problem: shortage.
As we've reported, and as the new IC Insights underscores, utilization levels have been jumping quickly to the point that 90+% is forecasted through the end of the year (Y09), and higher levels for Y10E:
With significant IC unit demand on the horizon and little capital spending being allocated for new/upgraded facilities, industry-wide capacity utilization stands a very good chance of being maxed out in the coming months, resulting in longer lead times, spot shortages, and escalating average selling prices throughout the industry. (click here for source article)
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