ProMOS Technologies, one of Taiwan's largest DRAM chipmakers, has nearly doubled its projected spending on new chip plants in 2006 to $US2.3 billion, according to a company executive.
ProMOS had earlier forecast its spending at $US1.2 billion.
The company also plans to begin construction of its third advanced, 12-inch (300mm) semiconductor wafer fabrication plant around the middle of the year. ProMOS will also start converting an older plant to 12-inch technology later this year. By the end of 2009, the company expects to have four 12-inch plants in production in Taiwan.
"These are clearly in our plans. We already know what products we're going to make in these plants," a vice-president at ProMOS, Ben Tseng, said.
The increased spending should help to ensure that component prices, and therefore gadget prices, continue to fall at a healthy pace for end-users.
DRAM in particular has already started the new year with a bang, with prices of Double Data Rate 2 (DDR2) memory chips rising due to tight supplies of the chips.
The spot-market price of the most actively traded DDR2, 512Mbit chips that run at 533MHz, has risen more than 22 per cent so far this year.
The chips now cost $US4.59 each, up from US$3.75 at the start of the year, according to DRAMeXchange Technology, which runs an online clearing house for the chips. Prices are expected to continue to remain strong throughout the first quarter of 2006.
Higher prices for DRAM hurt users because most PC companies tend to handle the situation in one of two ways - either raising PC prices to reflect higher component costs, or reducing the amount of DRAM in each PC, which hurts performance.
ProMOS intends to keep up with future demand by adding more new chip plants. The company has petitioned officials at a science park in central Taiwan, seeking more land for future 12-inch chip factories.
"For us to continue to grow in Taiwan, we need more land," Tseng said.
The company asked for land for two more 12-inch plants, although it had no time frame for when the facilities might be built, he said.
Most semiconductor manufacturers are building 12-inch factories. The plants take their name from the flat, 12-inch round silicon wafers that chips are made on. The new, larger wafers will enable producers to cut costs by about 30 per cent, by allowing them to make more chips on each wafer than they could on older, 8-inch (200mm) wafers. Thousands of DRAM chips can be made on a single wafer.
ProMOS has increased its production of DDR2 to catch the rising prices, but it takes a few months for DRAM chips to journey through the entire production process. That means that despite a number of companies trying to make more of the chips, users may not see prices come down for a while, unless PC demand slackens.