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AUGUST 10, 2004 BULLETIN

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Top Ten 2004 Pure-Play Foundry Ranking Released

"Big 3" become "Big 4" as China-based SMIC joins ranks

After growing twice as fast as the total IC market in 2003, pure-play foundry sales are forecast to increase 52 percent in 2004 to $17.17 billion.  This compares to a 31 percent increase forecast for the total IC market in 2004.  Figure 1 lists the major pure-play IC foundries and their sales for 2002 and 2003, and IC Insights’ forecast for 2004.  IC Insights defines a pure-play foundry (e.g., TSMC, UMC, Chartered, SMIC, etc.) as a company that does not offer a significant amount of IC products of its own design, but instead focuses on producing ICs for other companies.

In 2003, TSMC registered an all-time high in sales but lost 2 percentage points in marketshare.  Because of the numerous pure-play (e.g., SMIC) and IDM (e.g., IBM) foundry startups over the past few years, it has become increasingly difficult for TSMC to keep from losing some marketshare.  As shown, TSMC is forecast to lose another 5 points of foundry marketshare in 2004 while its 2004/2003 sales increase a strong 37 percent.

Overall, in IC Insights’ opinion, the so-called “Big 3” pure-play foundries of TSMC, UMC, and Chartered have now become the “Big 4” foundries with the addition of China-based SMIC.  As shown, in 2004, SMIC is forecast to almost triple its sales to just over $1.0 billion!  Amazingly, SMIC is forecast to go from serving only 1 percent of the pure-play foundry market in 2002 to having a 6 percent share in 2004.

It is also interesting to note how aggressive SMIC is expected to be in adding capacity over the next couple of years.  In 2005, if everything goes according to plan (i.e., doubling its capacity in both 2004 and 2005), SMIC will have 33 percent more wafer capacity than Chartered and just under half the capacity of UMC.

In 2004, the “Big 4” foundries are expected to be among the most aggressive capital spenders.  Moreover, although SMIC’s 2004 foundry sales are expected to be about one-fourth of UMC’s sales, SMIC is forecast to come close to matching UMC’s capital expenditures this year.  In total, the “Big 4” pure-play foundries’ capital spending in 2004 is forecast to surge 183 percent (to $7.2B), with each of the companies at least doubling their 2004/2003 expenditures!  In contrast, 2004/2003 worldwide semiconductor industry capital expenditures are forecast to increase 53 percent.

Figure 1

About IC Insights

IC Insights, Inc., based in Scottsdale, Arizona, is dedicated to providing high-quality, cost-effective market research for the integrated circuit industry. Founded in 1997, IC Insights offers coverage of global economic trends, IC market forecasts, capital spending and fab capacity trends, product market details, and technology trends, as well as complete IC company profiles and evaluations of emerging markets for ICs.

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