Not long ago, the total cost for a 300-mm, 0.13-micron wafer fab was around $2-to-$3 billion each. Now, the cost for a 300-mm, 90-nm (0.09-micron) plant is approximately $4 billion, said Joe Osha, principal semiconductor analyst for Merrill-Lynch, during a presentation at the Semico Summit today.

"The cost of a new fab is absolutely enormous," said Edward Ross, president of TSMC North America, the U.S. subsidiary of silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC).

"We have reached the point where very few companies can build factories," Ross said during a separate presentation at the Semico Summit. "New technologies will also become more expensive and difficult to develop. Foundries and their customers must form close collaborative partnerships."

The days that "real men have fabs are over," Ross said. The saying that "real men have fabs" was coined by W.J. Sanders III, chairman of Advanced Micro Devices Inc. At one time, Sanders believed that only real chip makers had fabs, but AMD is changing its tune, by recently forming foundry ties with IBM Corp. and Taiwan's United Microelectronics Corp.

"AMD will continue to have its own fabs, but foundries are the future," Sanders said in a presentation at the conference.