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Four companies battle it out for process tech dominance

Posted: 09 Oct 2012 ?? ?Print Version ?Bookmark and Share

Keywords:14-nm FinFET technology? pure play foundry? leading-edge process technology?

According to IC Insights, the pure play foundry business has been divided into two camps: four companies that offer leading-edge process technology and a host of smaller players that don't. This gulf translates directly into a huge gap in sales.

In a mid-year update to the firm's McClean Report, IC Insights highlighted a separation in foundry vendors' technical capabilities and said the more successful foundries will be those that keep up with the leading edge of the process technology roadmap.

Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and Globalfoundries Inc. are fighting tooth and nail for leadership in foundry manufacturing technology. Globalfoundries Inc. recently announced that it will offer 14-nm FinFET technology in 2014a clear shot across the bow of TSMC, the foundry market leader by a wide margin.

Prior to Globalfoundries entrance into the market, TSMC was by far the technology leader in the pure play foundry space. But Globalfoundries has changed the equation, according to IC Insights.

Globalfoundries is projected to derive 65 per cent of its 2012 revenue from advanced process technology nodes of 45-nm or below, according to IC Insights. TSMC, by contrast, is expected to derive only 37 per cent of its revenue from these advanced nodes, according to the firm.

But, by virtue of its much greater size, TSMC is expected to derive $6.23 billion from 45-nm and below nodes in 2012, compared to $2.79 billion for Globalfoundries, according to IC Insights.

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Figure: Major Pure-Play Foundries' 45nm Revenue.
Source: IC Insights.

China's Semiconductor Manufacturing International Corp. (SMIC) only recently put its 45-nm technology into production, more than three years after TSMC. Less than 1 per cent of SMIC's 2012 sales are expected to be derived from 45-nm and below, according to IC Insights.

United Microelectronics Corp. (UMC), the longtime No. 2 player in the space that was recently surpassed in sales by Globalfoundries, is expected to derive only 11 per cent of its sales from 45-nm and below process technology, IC Insights said.

TSMC is projected to derive an average of $1,190 per wafer in 2012, compared to $1,157 for Globalfoundries and $759 for SMIC, IC Insights said.

"There is an obvious correlation between the percentage of sales a major foundry has had over the past 18 months for advanced IC devices and its net income percentage," IC Insights noted.

Left in the Dust
The technology gap between SMIC and the rest of the pack in pure play foundry is even wider. Of the 14 pure-play foundries ranked between fifth and 18th in sales, only four (TowerJazz, Grace/HHNEC, Dongbu, and Xinxin) are expected to be able to produce ICs using 90-nm or below feature sizes in 2012, IC Insights said. Even this production is likely to be relatively limited, the firm said.

Collectively, these 14 foundries are forecast to account for $4.6 billion in sales, or about 15 per cent of the total pure-play IC foundry market in 2012, IC Insights said.

For foundries, keeping up with leading edge process technology can be accomplished in two ways, IC Insights said. One is through joint ventures and licensing agreements, such as the partnership between IBM and Globalfoundries. The other is through significantly increasing R&D spending to develop advanced technology, as TSMC has done, Globalfoundries said.

Revenue from 30-nm and below technologies is expected to account for about 30 per cent of total pure-play foundry revenue in 2012, up from 22 per cent in 2011, IC Insights said. Older technologies80-nm and aboveare expected to make up only 13 per cent of sales in 2012, down from 14 per cent in 2011 and 15 per cent in 2010, IC Insights said.

- Dylan McGrath
??EE Times

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