Fab

A fab, short for fabrication plant, is the highly specialized factory where semiconductor chips are physically manufactured. Building a single competitive fab can cost tens of billions of dollars and take years to construct and bring up to full production.

Because fabs are so expensive and slow to build, chipmakers plan capacity years in advance based on expected future demand, which means a fab built for one demand environment can end up with too much or too little capacity by the time it is actually running, a major source of the boom-and-bust cycles common in the semiconductor industry.