At last week's GSA Expo event here, specialty foundry vendors not only disclosed new initiatives, but they also see select capacity shortages, extended lead times--and a pending shakeout. Still to be seen, however, is if the current IC recovery will continue or fall back into a dreaded double dip. Specialty foundry vendors also see a new competitive threat on the horizon: Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC).

Perhaps the most surprising development was disclosed by Dongbu HiTek, a Korean pure-play foundry vendor. Dongbu, which has been a pure-play foundry, has quietly devised a CMOS image sensor and LCD driver IC that is being marketed under its own brand name. Dongbu's main focus will remain in the analog/mixed-signal foundry sector, but the company is taking a small step into the integrated device manufacturing (IDM) arena.

Another Korean specialty foundry vendor, MagnaChip Semiconductor Ltd., has just emerged from Chapter 11 bankruptcy protection and is renewing its foundry efforts. MagnaChip will continue to expand its analog/mixed-signal foundry portfolio, according to a spokesman. This is bad news for the market: MagnaChip has been the thorn in the side of some foundry vendors, as it reportedly provides processes at rock bottom prices.

Over time, it is unclear if MagnaChip can ultimately survive. In fact, the long-awaited shakeout in the foundry business is finally taking shape. The latest victim in the specialty foundry shakeout: China's Shanghai Hua Hong NEC Electronics Co. Ltd. (HHNEC) is reportedly set to buy struggling Grace Semiconductor Manufacturing Corp. (GSMC), according to reports.

In addition, ASMC, L-Foundry, Silterra and others are also acquisition targets, analysts said. All specialty foundries, which mainly offer analog, mixed-signal and related processes, are now looking over their shoulders and seeing a new competitive threat in TSMC.

TSMC recently joined the Interoperable PDK Libraries industry alliance. The IPL group, which includes Magma, Mentor, Synopsys and other tool and IP vendors, is pushing for a standard foundry process design kit (PDK) based on a 65-nm technology and beyond. TSMC has other analog/mixed-signal efforts in the works.

Other foundry providers are also moving full speed ahead with new processes and related offerings. On Semiconductor Inc. has recently expanded its foundry capabilities with the launch of a new 0.18-micron CMOS process technology. Austriamicrosystems, HHNEC, L-Foundry, Tower-Jazz, X-Fab and others have announced new processes or design kits.

Thankfully, all foundries, including TSMC, are also seeing the later stages of perhaps the worst downturn in the history of business. Until recently, ''everybody was struggling,'' said Jae-Inh Song, sales and marketing executive vice president for the analog foundry unit at Dongbu.

Then, from February to March, orders began to pick up within the LCD, mobile phone and other sectors. And in a relatively short time, Dongbu's fab utilization rate jumped from 40 percent at one of its lowest levels, to 90 percent, Song said. Right now, Dongbu's ''fab is full,'' he told EE Times at the GSA Expo.

''I'm a little optimistic for next year,'' he said. ''We see solid growth until the second quarter of 2010.''