Four foundries dominate chip outsourcing

By Jim Carbone -- Purchasing, 5/14/2008 9:42:00 AM

The big four semiconductor foundries now account for more than two thirds of outsourced semiconductor production, according to researcher IC Insights. The big four include Taiwan Semiconductor Manufacturing Co. (TSMC), UMC, Chartered, and SMIC.

With sales of almost $10 billion, TSMC was clearly the leading foundry supplier in 2007. Its revenue increased 1% over 2006. TSMC’s sales were only 11% less than the combined sales of the top 14 foundries.

UMC maintained its second place ranking with sales of $3.8 billion, an increase of 2% over 2006. SMIC increased its sales 6% and edged slightly ahead of Chartered in 2007 to take over the number three position in the ranking.

The big four accounted for about 68% of the $24.5 billion foundry market in 2007. TSMC, UMC, SMIC, and Chartered are pure-play foundries—companies that do not offer IC products of their own design, but instead focus on producing ICs for other companies. In 2007, pure play foundries accounted for 84% of the total foundry market.

Integrated device manufacturer (IDM) foundries accounted for 16% of the 2007 foundry market. IDM foundries are defined as those companies that offer foundry services in addition to their own ICs.

IDM foundries include IBM, NEC, TI, and Samsung. In 2007, Samsung edged it way into the ranks of the top 10 foundry suppliers. In 2006, Samsung announced it was going to place special emphasis on its foundry business.

Aided by a technology alliance with IBM and Chartered and with a new, 300mm wafer fab dedicated exclusively to foundry production, Samsung has quickly emerged as a foundry player. Samsung’s foundry sales were $385 million in 2007, placing it in 10th-place in the top 14 ranking.
IC foundries have two main customers—fabless IC companies such as Qualcomm, Nvidia, and Xilinx, and IDMs such as Freescale, ST, and others.