China's booming fab construction industry will begin to level off in 2006 at which point the chip makers and design houses will enter a period of consolidation, said Robert Tsu, director of customer engineering for Semiconductor Manufacturing International Corp. (SMIC), while delivering a keynote address at a JEDEX council meeting in Shanghai this week.

SMIC is one of the leading pure-play semiconductor foundry. The company is planning to build three 12-inch wafer fabs in Beijing, according to Tsu. Of all the 56 fabs operating in China, only 8 have 8-inch wafer capability.

Despite new fabs being built in China, domestic chip production will still fail to meet soaring demand, Tsu said. China domestic semiconductor output this year will reach $4.8 billion, while estimated demand is $22.1 billion. In 2004, estimated domestic chip demand is $27.6 billion but chip production will total only $6.3 billion.

By: DocMemory
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