Foundries could account for 35-45 percent of chip market long term
09/01/1997
Foundries could account for 35-45 percent of chip market long term
The semiconductor foundry industry will continue to see strong growth over the next few years, but ongoing overcapacity will result in declining prices/in.2 of silicon, said Dataquest principal analyst and program manager James Hines during a presentation at Dataquest`s SEMICON/West seminar, sponsored by WaferNews.
Long term, the semiconductor contract manufacturing market could account for 35-45 percent of all chip production, up from about 10 percent today, said Hines, who indicated that foundry fabs will tend to get larger over the years as operators seek to concentrate capital and take advantage of economies of scale.
In 1997, however, Hines forecast that foundry revenues will be flat at about $6.5 billion, despite an increase in wafer area output of about 14 percent to 309 million in.2 Wafer prices have plunged some 30 percent below year-ago levels, he noted, which accounts for the discrepancy. On the upside, world revenues are seen surging to over $15 billion by 2001, with the amount of silicon processed soaring by an average of over 20 percent annually in the 1998-2000 time frame, posting a compound annual growth rate of 14 percent from 1996-2001.
Currently, 0.35-micron foundry capacity is "almost balanced" with demand, behaving as "a near-ideal market," said Hines. "Prices are soft because of competition, but are more stable than in the past." Supply is about five months ahead of demand, he said, or roughly the equivalent of a 200-mm, 20,000 wafer/month fab. Most of the 0.35-micron supply is from dedicated foundries, as opposed to integrated device manufacturers selling excess capacity, who now account for more than half the contract market. Demand at 0.35 micron is primarily from fabless semiconductor firms. At less-aggressive geometries however, such as the 0.7- and 0.6-micron levels, many integrated manufacturers are offloading production to foundries, and shifting their own fabs to more advanced production. - P.N.D.