Chip capacity utilization will cross the 90% mark in most regions in September, but foundries don’t seem to be too concerned, according to a new report from VLSI Research.

Although capacity utilization remains high, “foundries don’t want a repeat of the 2000 bubble, so they are holding back,” said Dan Hutcheson, despite expectations from IDMs that foundries will provide extra capacity. Taiwan’s equipment consumption was 16% in August, below the US (22% ), Japan (24%), and other Asia (24%). “It is fairly safe to say that the foundries’ current spending levels will not allow them to gain share,” said Hutcheson. Even though a few have made inroads into China, “these are still paper tigers. It takes equipment to make real capacity and this is not happening,” he said.

Hutcheson warned a capacity crunch looms as customers focus on pricing as opposed to supply, sacrificing long-term planning for short-term earnings. “In an environment where you can’t raise the top line, you concentrate on beating down your suppliers,” and put off dealing with supply issues into the future, he said.