Semiconductor foundry business keeps growing in 2011

Media tablet and mobile phone sales drive market revenues

The worldwide semiconductor foundry market expanded 5.1 per cent in 2011 to $29.8 billion (£18.6bn) on the back of media tablet and mobile phone sales, according to research behemoth Gartner.

Samuel Tuan Wang, research director at Gartner, said a slide in revenue was only prevented by the strength of those categories, as well as a steep depreciation in the greenback. The supply chain has suffered from the natural disasters in Japan and Thailand – growth in the foundry market would have been 0.7 per cent without that depreciation in the US dollar.

"After 40.5 per cent growth from 2009 to 2010, the foundry market maintained relatively flat business in 2011 due to the weakness in PC production and an overall consumer demand hit, as well as a leaner inventory practice by customers that started in mid-2011," noted Wang.

The semiconductor industry globally also continued to consolidate, with the top five players taking almost 80 per cent of market, he said.

Leading player TSMC grew its share to 48.8 per cent in 2011. Number-two player UMC lost ground, taking just 12.1 per cent of the market, as did third and fourth place holders GlobalFoundries and SMIC, whose shares shrank to 12.0 per cent and 4.4 per cent, respectively.

Samsung's foundry, with $470 million in revenue, ranked at number nine. However, it would have moved up to fourth place if its estimated $1 billion Apple wafer business had been included in its foundry revenue, said Wang.

Communications, consumer and data processing remained the key applications driving the foundry business, accounting for 42.7 per cent, 20.9 per cent and 20.3 per cent of foundry revenue, respectively, in 2011. Europe took a 10 per cent share of the global market, according to Wang.

"Given the aggressive capital spending by large foundries during 2010 and 2011, the oversupply of foundry capacity was inevitable," he added. "The utilisation rate for foundries continued to decline quarter to quarter in 2011, causing the annual average utilisation rate to drop to 81 per cent from 91 per cent in 2010."

Advanced technology for mobile applications will probably continue to drive the semiconductor foundry market for the next few years, said Wang.