March 28, 2006 – Singapore’s Chartered Semiconductor regained the No.3 spot among worldwide foundry sales in 2006, retaking the ranking behind foundry stalwards TSMC and UMC after losing the spot to SMIC a year ago, according to data from Gartner Dataquest.
Total worldwide foundry sales rose 16.7% to $21.5 billion, shrugging off a slowdown in business and an industrywide inventory buildup, noted the firm. Foundry saleas now represent nearly 24% of total semiconductor sales. Taiwan, “the epicenter of all [foundry] activities,” represented 87% of the market with $18.7 billion in sales, Gartner noted.
Both Chartered and No. 6 Dongbu Electronics achieved >33% growth — doubling total foundry industry growth of 16.7% — to move up the ranks in 2006. Gartner analyst Kay Yang attributed Chartered’s strong growth mainly to ramping its 300mm Fab 7 and a better product mix that lowered its breakeven utilization to 70%, he noted. For Dongbu, which also enjoyed excellent growth in 2006, the key was an aggressive capacity expansion and a focus on delivering specialty chips for high-volume flat-panel and mobile handset markets.
The only other foundries to outpace the industry average were SMIC (25.1%) and TSMC (18.1%). Those falling under the curve included UMC (13.1%), Vanguard International (12.8%), X-Fab/1st Silicon (11.4%), and MagnaChip/Hynix (2.0%).
Two firms on the list actually saw revenues decline during 2006: IBM Microelectronics (-15.1%) and HHNEC (-1.6%). Both held onto their respective spots, but just barely — Dongbu had less than half of IBM’s sales in 2005, but narrowed the gap significantly, and HHNEC is now nearly in a tie with X-Fab. IBM’s revenues were hurt by a slowdown in demand from system OEM customers, Tan said, adding that both Chartered and IBM showed disappointing growth in the game console market last year, he added.
Tan projects that foundry growth will slow to the “mid-single-digit range” in 2007, depending on capex, inventory levels, and utilization rates. Also, Chartered’s reclaim of the No.3 ranking will be short-lived, with SMIC retaking the spot this year as it ramps new fabs in Shanghai and Chengdu, Tan noted. “As competition intensifies in China, smaller companies like HHNEC will need to move quickly into a particular niche market or otherwise should be prepared to be forced down the ranking list,” he added.
Tan also noted that the highly capital-intensive foundry market essentially operates as an oligopoly — meaning just a few participants control the market. TSMC alone wields 45.2% market share; together the top three providers account for two-thirds of all foundry sales.
Preliminary Top 10 worldwide foundries
(Revenues in US $M)
Company……………………………..2005………………2006……………..Growth %…….Market share %
Company……………………………..2005………………2006……………..Growth %…….Market share %
TSMC…………………………………8228…………………9716…………………18.1…………………45.2
UMC……………………………………2822………………..3191…………………13.1…………………14.8
Chartered…………………………..1132…………………1527…………………34.9…………………..7.1
SMIC………………………………….1171…………………1465…………………25.1…………………..6.8
IBM Microelectronics……………810…………………..688………………..-15.1…………………..3.2
Dongbu Electronics……………..347…………………..462…………………33.1…………………..2.1
MagnaChip (Hynix)……………..396…………………..404………………….2.0……………………..1.9
Vanguard International………..353…………………..398…………………12.8…………………..1.9
HHNEC………………………………..305…………………..300…………………-1.6……………………1.4
X-Fab Silicon*………………………263…………………..293…………………11.4…………………..1.4
Top 10 Total…………………….15,827……………..18,445………………..16.5………………….85.8
Others…………………………………2594…………………3050………………..17.6………………….14.2
TOTAL MARKET……………….18,421……………..21,495………………16.7……………………–