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Apple's pure-play foundry shift lifts IC market

Posted: 13 Aug 2013 ?? ?Print Version ?Bookmark and Share

Keywords:pure-play foundries? manufacturing? semiconductors?

The migration of Apple's semiconductor production from Samsung to pure-play foundries will give the chip contract manufacturing market a much needed lift in 2013, research firm IHS forecasts. By the end of the year, pure-play semiconductor foundry market revenue is expected to to rise 21 per cent compared to 2012, while the overall semiconductor industry will expand by five per cent.

The pure-play foundry industry is already on track to achieve such growth this year, with revenue amounting to $8.2 billion in the first quarter, up 4 per cent from $7.9 billion in the fourth quarter last year, as shown in the attached figure. In comparison, the overall semiconductor market was down by 5 per cent during the same period.

The foundry segment is also believed to have outperformed the rest of the industry in the second quarter when final figures are released, and then go on to perform strongly for the second half.

Worldwide revenue forecast for pure-play foundries

Table 1: Worldwide revenue forecast for pure-play foundries ($B).

Pure-play foundries are companies that exclusively perform contract manufacturing of chips for other semiconductor suppliers. Major companies in the pure-play foundry business include Taiwan Semiconductor Manufacturing Co. Ltd. and United Microelectronics Corp.

Apple takes apps processor business elsewhere

"The growth outlook for the pure-play foundry business has risen considerably in anticipation of Apple's transition of its applications processor chip manufacturing to third-party manufacturers," said Len Jelinek, director and chief analyst of semiconductor manufacturing at IHS. "Previously, Apple had relied on Samsung as the primary supplier of applications processor chips for the iPhone and iPad. However, Samsung is not considered a pure-play foundry. Instead, it is designated as an integrated device manufacturer (IDM)-a chip supplier that not only builds products but also possesses design capabilities and sells devices under its own brand name, functions not performed by foundries."

Apple already has its own designs and does not need an IDM for its chips to be made, so it can just as easily move its semiconductors to a foundry.

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