The traditional three leaders – TSMC, UMC, and Chartered – continued to dominate the pure-play IC foundry market in 2004, according to a new ranking by IC Insights. But a wider look at the top foundries shows that hungry Chinese foundries are staking their claim in the industry, led by up-and-coming SMIC, which more than doubled its sales in 2004 to nearly $1.0 billion.

TSMC dwarfed all other foundries with 2004 sales of $7.65 billion, nearly doubling No. #2 UMC and 7x that of Chartered. Taiwanese foundry Vanguard posted 66% growth in 2004 to take the No. #5 spot between SMIC and South Korea’s DongbuAnam. Both Malaysia (Silterra, 1st Silicon) and the US (Jazz Semiconductor, PolarFab) placed a pair of entries in the top 18, while Europe held a single spot with X-Fab.

Comparing sales and net income from 2000 and 2004 for the top three foundries, TSMC showed healthy double-digit gains in both categories, while UMC and Chartered struggled. IC Insights also noted an interesting statistic: Net income as a percentage of sales was better for all three foundries in 2000 than in 2004, but far more so for UMC and Chartered – perhaps indicating that the real impact of increasing competition from China is not reduced sales levels, but pricing pressure.

Most notable in this list of top pure-play foundries is the emergence of China as a chip manufacturing power. In 2002, four Chinese fabs posted sales of $320 million for a collective 4% share of the market. Two years later in 2004, six Chinese fabs – SMIC, HHNEC, ASMC, Grace, HeJian, and CSMC – pumped out total sales of more than $1.9 billion, and gobbled up more than 12% of the market. This emergence clearly has had an affect on the leaders. TSMC and UMC still commanded more than two-thirds of the market in 2004 (69%) – but that’s down from 75% in 2003 and 81% in 2002. TSMC alone lost 5% marketshare in 2004 despite a 31% increase in sales.