Foundry growth to fall short of 10% in 2002, but utilization improves, says Dataquest

SAN FRANCISCO -- The silicon foundry business is projected to grow in the high "single-digit" percentage range in 2002, with fab-utilization rates expected to improve and hit the 70% level by the end of next year, according to a new forecast scheduled to be presented by Dataquest Inc. here on Friday.

Originally, Dataquest projected that the foundry business would grow by 10% in 2002 over 2001. In 2001, the business will fall by 26%--perhaps "30%-plus"--over 2000, due to the current and sharp IC downturn, said analyst Jim Hines, who tracks the market for the San Jose-based market research firm.

Hines is slated to present an updated foundry forecast at the Gartner Dataquest Semiconductors 2001 conference in San Francisco on Friday. But in an interview today at the conference, Hines hinted that he has slightly lowered the original forecast, saying that the foundry business will grow in the "high single-digit" numbers in 2002 over 2001.

The Dataquest analyst also declared that the foundry business has finally hit the bottom. "There are some mild improvements in the industry," he said. "Orders have stabilized."

Earlier today, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) reported its fourth consecutive sequential increase in monthly sales during October. The world's largest foundry company said it continues to expect fourth-quarter revenues to grow over the third quarter (see today's story).

Fab-utilization rates among the leading foundries also improving as well. At present, the average fab-utilization rate in the foundry business is in the "mid-30%" range, Hines said.

"My forecast is that fab-utilization rates will increase to 70% within the next 12 months," he said. "That's still low, but an improvement."