What about 2010? Look for a fab spending rebound--with fewer but bigger 300-mm plants in the works.

But to bring supply and demand in real balance, chip makers will need to outsource more of their production--and consolidate, said one analyst. ''While the cost of new fabs eliminates most companies from building (fabs), integrated device manufacturers, OEMs and fabless companies should look to outsource more of their manufacturing to the foundries,'' said David Christensen, an analyst with Gartner Inc., in a report.

''Memory companies should continue to reduce capacity while utilization rates remain low and look to consolidate and find manufacturing partnerships, as is already occurring in the Taiwanese and Japanese DRAM markets,'' he said.

Needless to say, 2009 has been a gloomy year for new fabs and capital spending, due to the ongoing downturn. ''Worldwide semiconductor capacity continues to decline as companies almost halve their capital expenditure, cancel or push out new fab projects, and shutter fabs across all wafer sizes,'' he said. ''Semiconductor capital expenditure has dropped 46 percent, inventory levels are up to 2001 levels, and utilization rates have plummeted to 55 percent during the downturn.''

The SEMI trade group believes that the picture is much worse. ''Spending on fabs is expected to fall by 51 percent in 2009,'' according to San Jose-based SEMI. ''On a global scale, construction spending is at its lowest level in 10 years.''

In 2010, investments in fab construction projects are expected to almost double and spending on equipping fabs may increase by as much as 90 percent year-over-year, according to SEMI.

Worldwide installed capacity for 2009 is expected to decline by about 3 percent, mainly due to fab closures. A new forecast shows that installed capacity for 2010 could increase by about 6 percent, according to SEMI.

According to SEMI, 19 fabs closed in 2008, and about 35 facilities will close in 2009, and some 14 are expected to shutter in 2010.

''Nine fabs are expected to launch operations in 2009. Overall the trend of new facilities commencing operations has slowed since 1995, due to the fact that most new fabs are 300-mm mega-fabs for memory production, meaning fewer but larger fabs are needed,'' according to SEMI.

Most of the plant shutdowns are older fabs. ''The downturn has helped manufacturers to identify some of the less-economical and underutilized older fabs,'' said Gartner's Christensen.

''In 2008, most of the capacity loss came from 200-mm memory fabs,'' he said. ''At the same time, new fabs are each producing more planned capacity than was possible nine years ago. This is partly the result of using larger wafers. And it is partly because manufacturers have built significantly larger fabs -- producing more than 80,000 300-mm (wafer starts per month) -- to accommodate anticipated demand for memory (DRAM/NAND flash) in particular.''