Question-and-Answer Session
Operator
(Operator Instructions). Your first question will come from the line of Mehdi Hosseini of FBR.
Mehdi Hosseini - FBR
Yes. Thank you. I do recognize that you don't really provide any commentary on shipment and pricing into Q4, but I would imagine that given your customers' inventory adjustments the wafer shipment decline should be at least in the high single digit with pricing pressure coming in. Am I in the right direction if you could help me understand the trend here?
Lora Ho
I think if you look at our guidance for the fourth quarter, we are guiding NT$74 to NT$76 billion, which represents a roughly 8% to 10% revenue drop for this combination of utilization for our mix and ASP also. We don't break down that anymore.
Mehdi Hosseini - FBR
Okay, and then just one more question as a follow up, your competitor UMC is talking about at least $1 billion in spending for next year as they bring up 55 nanometer capacity. How should we think about adjustments you are going to make your capacity for next year, in terms of capital intensity do you expect increased spending just to bring up the 55 nanometer.
Dr. Rick Tsai
Yeah, we do plan to add capacity at 55 nanometer next year, because we have some 90 nanometer but I think mainly have been more for this 55 nanometer. We did say in the afternoon that the tape-out for 2007, as far as we can tell now, the number of course is still being worked out, we will give you more definitive numbers by January timeframe. But now, what we're seeing now is a modest increase over that of 2006, which Lora just reported, that's about NT$2.6 billion.
Mehdi Hosseini - FBR
Thank you.
Operator
And your next question is from the line of Bhavin Shah of JP Morgan.
Bhavin Shah - JP Morgan
Yes, can I ask for a clarification? I think in the afternoon you discussed the integration possibilities with [VUN Graphics] and how that’s going to expand the market, so, the -- expand the available market for foundries and for you I guess. So, is the expansion of our market you believe is a possibility or you feel definitely happening?
Dr. Rick Tsai
Bhavin as I said also in the afternoon I think, well, we are still studying that ourselves here. What I understand is that there can be both high-end application or for low-end application, well, high performance or very low cost application. So if you look at the -- if this -- if you can work out a good solution for the very low cost PC then there is a -- we believe that is still very large market out there in different countries that can use this kind of a ultra low cost PCs.
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