Samsung steams into foundry top ten, says IC Insights

As a result Samsung has come from zero sales in 2005 to a significant position although still an order of magnitude down on market leaders Taiwan Semiconductor Manufacturing Co. (TSMC), United Microelectronics Corp. (UMC) Semiconductor Manufacturing International Corp. (SMIC) and Chartered Semiconductor Manufacturing.

Europe-headquartered X-Fab, which merged with 1st Silicon in 2006, lies on position higher than Samsung and is the only non-Asia-Pacific pure-play foundry company in the top 14 group. Eleven of the top 14 foundry companies listed are based in the Asia-Pacific region.

With sales of almost $10 billion, TSMC was the leading foundry supplier in 2007 although revenue only increased 1 percent over 2006. TSMC's sales were only 11 percent less than the combined foundry sales of the other companies listed in the top 14 ranking.

UMC maintained its second place ranking with sales of $3.8 billion, an increase of 2 percent over 2006. SMIC increased its sales 6 percent and edged ahead of Chartered in 2007 to take over the number three position in the ranking. Together, these "big four" accounted for 68 percent of the $24.5 billion foundry market in 2007.

TSMC, UMC, SMIC, and Chartered are pure-play foundries—companies that do not offer IC products of their own design, but instead focus on producing ICs for other companies. In 2007, pure play foundries accounted for 84 percent of the total foundry market.

Integrated device manufacturer (IDM) foundries accounted for 16 percent of the 2007 foundry market. IDM foundries are defined as those companies that offer foundry services in addition to their own ICs. IDM foundries include IBM, NEC, TI, and Samsung. In 2007, Samsung edged it way into the ranks of the top 10 foundry suppliers.

Aided by a technology alliance with IBM and Chartered and with a new, 300-mm wafer fab dedicated exclusively to foundry production, Samsung has quickly emerged as a foundry player.

IC foundries have two main customers — fabless IC companies such as Qualcomm, Nvidia, and Xilinx, and IDMs such as Freescale, ST, and others. Large companies and an increasing number of mid-size companies are ditching their fabs in favor of the fabless business model. Companies in this category include LSI and Avago (ex-Agilent), which have all become fabless in the past few years.

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