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TSMC grabs 49% of foundry market share

Posted: 04 Apr 2012 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor market? foundry business? semiconductor supply chain?

In 2011, the worldwide semiconductor foundry market reached $29.8 billion, representing a 5.1 percent growth from 2010. This is according to market research firm Gartner Inc.

According to the company, the top four foundries held their rankings from the previous year. However, of those four, only the leading foundry, Taiwan Semiconductor Manufacturing Co. Ltd (TSMC) increased its market share. The foundry giant took 48.8 percent of the total foundry business.

Samsung, which holds the No. 9 spot in the ranking, made about $1 billion of wafers for Apple in 2011 that are not counted as part of its foundry business, Gartner said. If those were bundled with Samsung's foundry business it would rank as the fourth largest foundry chip company. However, there is much speculation that Samsung may lose Apple business to TSMC with the introduction of the A6 processor.

Although the foundry market overall outperformed the flat general semiconductor market, which stayed just below $300 billion, according to World Semiconductor Trade Statistics organization, Gartner analysts attributed much of the foundry growth to depreciation in the U.S. currency and said that without that the foundry growth would have been 0.7 percent. The foundry market, like the general semiconductor market, was hit by disruptions to the semiconductor supply chain caused by the Japan earthquake and tsunami in March 2011 and flooding in Thailand in the second half of 2011.

"After 40.5 percent growth from 2009 to 2010, the foundry market maintained relatively flat business in 2011 due to the weakness in PC production and an overall consumer demand hit, as well as a leaner inventory practice by customers that started in mid-2011," said Samuel Tuan Wang, research director at Gartner. Demand for mobile phones and tablet computers helped prevent a slide in foundry and chip sales, Gartner added.

Consolidation of foundry business continued. The top five foundry players accounted for almost 80 percent of the foundry market.

Specialty foundry Tower Semiconductor Ltd. climbed from No. 6 to No. 5 in 2011 as it increased foundry sales by 20.4 percent. At the same time, analog and mixed-signal foundry Dongbu Hitek Co. Ltd. saw its sales fall 5.7 percent compared to 2010 prompting a fall from No. 6 to No. 8 in the ranking. The biggest loss of sales was attributed to Semiconductor Manufacturing International Corp. (SMIC) where sales plummeted 15.1 percent.

Foundry business ranking

2011 and 2010 ranking of sales revenue from shipments of foundry wafers. Samsung's revenue in this ranking does not include its ASIC business from Apple.
Source: Gartner (March 2012).

Samsung's foundry, with $470 million in revenue, is only ranked No. 9. However, the company has been expanding its LSI business in 2011. Had the estimated $1 billion of wafers that Samsung makes for Apple been included in its foundry revenue, Samsung would rank No. 4 in the foundry ranking. Powerchip had a nearly threefold increase in foundry revenue in one year due to the strategic decision to shift from the commodity DRAM business to foundry in early 2011, Gartner noted.

Communications, consumer and data processing continued to be the three key applications driving the foundry business. In 2011, these applications accounted for 42.7 percent, 20.9 percent and 20.3 percent of the foundry revenue, respectively. Fabless customers contributed 77.8 percent of the foundry business, integrated device manufacturers contributed 20.2 percent, and the remaining came from system companies. By region, America's customers generated 62.8 percent of the foundry revenue, Asia/Pacific 22.2 percent, Europe 10 percent and Japan 4.9 percent.

"Given the aggressive capital spending by large foundries during 2010 and 2011, the oversupply of foundry capacity was inevitable," said Wang. "The utilization rate for foundries continued to decline quarter to quarter in 2011, causing the annual average utilization rate to drop to 81 percent from 91 percent in 2010. Advanced technology for mobile applications was the driver for the growth of foundry business in 2011, and the demand is expected to remain high during the next few years."

- Peter Clarke
??EE Times

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