In a news release, IC Insights said it has boosted its forecast for semiconductor industry capital spending in 2011 and now expects outlays to climb to $60.4 billion, a 17% increase over the $51.8 billion the industry spent in 2010.

Further, semiconductor industry capital spending is expected to reach a new all-time high of $63.3 billion in 2012. New manufacturing lines and upgrades to smaller process geometries are expected from foundries as more IC suppliers look to outsource production. DRAM and flash memory suppliers are spending primarily to upgrade to smaller process geometries.

In the report, IC Insights notes the top 10 semiconductor industry spenders are forecast to increase their outlays by 25% this year. In contrast, the remaining semiconductor industry companies are expected to cut their capital expenditures by 1% in 2011.

Capital spending as a percent of sales was only 16% in 2010, the second lowest level on record, with 2011 spending as a percent of sales forecast to be 17%. IC Insights believes that this level of capital spending will not lead to an industry-wide overcapacity situation through 2012. In fact, the ratio of capital spending to semiconductor sales is expected to stay in a narrow range of 14%-17% over the next five years.

To read the full text of the IC Insights news release:
click here.