January 17, 2012 – In the ranks of top foundries, there’s a new Number Three in town: Samsung, which climbed up the ranks again in 2012 thanks to its ubiquity in smart phone technology, according to updated rankings by IC Insights.

Samsung jumped into the foundry scene in mid-2010, and quickly became one of the anticipated long-term leaders in the sector. It’s now easily the biggest IDM foundry operation, with sales nearly 10× that of IBM, IC Insights notes. IC Insights’ August update projected Samsung finishing in fourth place just behind UMC, separated by about $400 million, but anticipated Samsung surpassing the Taiwan rival in 2013.

Samsung followed a sparkling 82% growth in 2011 by nearly doubling sales again to $4.33 billion, putting it just shy of GlobalFoundries which grew sales a solid 31% last year to $4.56B. (Compare that with former No.3 UMC, which has seen sales declines each of the past two years: -5% in 2011, -1% in 2012.) In fact IC Insights thinks Samsung will challenge GlobalFoundries for the No.2 spot before 2013 is done, leveraging its leading-edge capacity and huge capital spending budget. With dedicated IC foundry capacity reaching 150,000 300mm wafers/month by 4Q12, and an average revenue/wafer of $3000, Samsung’s IC foundry capacity could pull down $5.4B in annual sales, the analyst firm calculates.

How did Samsung get so big so fast in the foundry business? It supplied chips to nearly half of the industry’s 750 million smartphones shipped in 2012 — application processors for the 220 million of its own handsets in 2012, plus the 133 million iPhones Apple shipped. Note that Apple made up about 89% of Samsung’s total foundry sales, despite being bitter rivals in broader electronic device markets, and Apple is still very reliant on Samsung for IC processors for iPads, iPhones, and iPods — and gets favorable pricing thanks to "bundling" deals using Samsung’s memory chips, IC Insights notes. Apple is exploring other sourcing options (TSMC, GlobalFoundries, and possibly Intel) to decouple somewhat from reliance on Samsung, but the analyst firm points out that TSMC currently is already running high utilizations and can’t take on such a heavy new workload, and "as of early-2013, no other foundry in the world could come close to matching Samsung’s total IC supply capabilities."