Bright spot for foundries

Bright spot for foundries

BY JIM KUPEC President, United Microelectronics Corp. USA, Sunnyvale, Calif.

Few in the semiconductor industry need to be reminded of today's current economic environment. The foundry sector, however, is finding a silver lining within this industry shift. From UMC's point of view, we are seeing tremendous activity and interest in 0.13-micron technology platforms from both fabless semiconductor companies as well as large integrated device manufacturers.

Many factors support this phenomenon, which ironically, is facilitated by the industry slump itself. In the past two years, aggressive research and development efforts have propelled foundry technology to match or even surpass that of the world's semiconductor leaders. And during these times of slower sales, many are accelerating new product development on leading-edge processes to gain market penetration.

The effects of this focus shift are already being seen in the market today in feature-rich products that must eke out the best speed-power performance at lower power levels or integrate dense memory, analog, mixed-signal and fast logic functions. With the shrinking budgets and decreased revenue most large semiconductor companies face, they are realizing better cost effectiveness by turning to foundries for leading-edge technologies rather than spending huge amounts of R&D capital to develop them internally.

Currently, more than 30 companies are designing more than 60 products into our 0.13-micron technology, a number greater than we saw with the early introduction of our 0.25-micron and 0.18-micron processes.

Just as compelling is the much wider variety of early adopters designing into our 0.13-micron technology, including the wireless, telecom, high-performance CPU, and consumer sectors.

This trend is in line with current Fabless Semiconductor Association projections. According to FSA's estimates, foundry market share is expected to increase almost tenfold by 2010, from $12 billion to $110 billion. This growth figure will undoubtedly include the revenue from the growing number of integrated device manufacturers (IDMs) turning to foundries. IDMs accounted for 25 percent of our total revenue in 2000, up significantly from 14 percent in 1999.

Though it remains uncertain when the recovery will occur, it is clear that the stress of the downturn is driving more companies to adopt the foundry model in order to utilize advance process capabilities while leveraging the economic advantages that foundries are able to provide.