TSMC maintains top spot among foundries

SCOTTSDALE, USA: IC Insights' ranking of the leading IC foundries for 2009 is presented in Fig. 1. The list includes both pure-play and IDM foundries. Among the top 17 foundry companies listed for 2009, 11 are based in the Asia-Pacific region, four are based in the US, and two are headquartered in Europe.In 2009, TSMC topped the list of foundries with $9 billion in sales. TSMC's sales were about 3X that of UMC, which in turn had more than the combined foundry sales of Chartered and SMIC in 2009.

GlobalFoundries, the new foundry formed by spinning off AMD's wafer fabs, "officially" started operations in March 2009. In 10 months of operation, it generated $1.1 billion in sales making it the fourth-largest foundry in 2009. There were only four IDM foundries on the list. IBM, the largest IDM foundry in the world, had only about 4percent of the 2009 foundry sales volume of industry leader TSMC.

Overall, the foundry business declined 10 percent in 2009, the same percentage as the overall IC industry. But IC Insights forecasts the 2010 foundry market to jump 24 percent to $26.8 billion. Between 2009 and 2014, the foundry market is forecast to grow at an average annual rate of 13 percent, reaching $40.6 billion in 2014.

IC Insights believes the foundry business is still in the midst of its consolidation phase. Tower acquired Jazz in 2008 and the combined sales propelled Tower to the 12th largest foundry in the world in 2009 (and the only foundry to post an increase in sales).

In April of 2009, UMC stated that it intended to acquire Chinese foundry He Jian by purchasing the remaining 85percent of the foundry that it did not already own for approximately $285 million. However, it was reported in mid-August of 2009 that the deal was in jeopardy because of Taiwanese government restrictions on the number of fabs that Taiwanese companies could operate in China. And, AMD spin-off GlobalFoundries acquired Chartered in 4Q09.

Together, GlobalFoundries and Chartered's sales would have amounted to over $2.6 billion in 2009, enough to put the combined company's sales only 8 percent behind second-ranked UMC. Overall, IC Insights expects more mergers and acquisitions in the foundry business over the next few years with some of the Chinese foundries being some of the more likely candidates.

Among pure-play foundry players, the "Big 4" (TSMC, UMC, Chartered, and SMIC) have dominated sales over the past seven years. In 2009, GlobalFoundries was included as a major player and the "Big 4" became the "Big 5."

However, since Chartered was purchased by GlobalFoundries in 4Q09, and will be incorporated into GlobalFoundries sales in 2010 and beyond, the pure-play foundry industry will revert back to describing the major players as the "Big 4" (TSMC, UMC, SMIC, and GlobalFoundries) once again.

In 2009, the "Big 5" companies held an imposing 82 percent share of the total worldwide pure-play IC foundry market. Moreover, IC Insights believes that the top pure-play foundry companies will continue to gain marketshare over the next five years.

Source: IC Insights