In a consolidating semiconductor business environment and innovation in semiconductor fabrication already scaling new heights with existing strong players, where do you think the wafer capacity should concentrate? It’s pure-play foundries or pure-play-like foundries, and those who supply high-volume common components such as memories. By pure-play-like foundries I mean IDMs which are fairly open to manufacture for other fabless companies; Samsung is at the top, very recently they won a deal with Qualcomm to manufacture their Snapdragon 820 chips.
When we talk about memory suppliers, like pure-play foundries they also manufacture memories for the whole world, from B2B up to B2C segments. So that’s natural for them to have large wafer fab capacities for memories.
A chart from IC Insights shows the world wafer fab capacity heavily concentrated, 72% of total with top 10 semiconductor manufacturers.
Samsungbeing at the top, the second wafer producer is the largest pure-play foundry TSMC. From the chart, it’s impressive to see GlobalFoundries having largest yr-yr increase in wafer capacity at 18%; TSMC’s yr-yr increase is next at 14%. Also, GlobalFoundries climbed at rank higher in 2015 compared to 2014.
The top memory suppliers, Samsung, Micron, Toshiba, and SK Hynix occupy highest ranks within top 5. So, that explains very well the memory suppliers’ dominance in wafer fab capacity.
Micron has accumulated substantial memory capacity through acquisitions of Elpida and Rexchip, and also from extra Inotera capacity and stake in IM Flash Technologies fabs. Similarly, Toshiba has substantial addition of flash memory capacity from SanDisk. So, we can see fair amount of consolidation in this space.
If we see overall percentage share region wise, South Korea with Samsung and SK Hynix dominates with 23.6% of total worldwide wafer capacity which is at 16350 thousand wafers per month. North America is next with four companies (Micron, GF, Intel, and TI) there at 22.3%. Taiwan’s TSMC and UMC have 15% share.
Going forward we are going to see more consolidation in fab business; setting up new fab is becoming unbearable by any new or existing weak players. Also we may see IDMs opening up their running fabs for manufacturing chips for other fabless companies, but that depends on how viable their fabs are in terms of technology and cost, and market requirement; IoT and automotive segments can offer varied requirements. At the same time some IDMs may go fab-lite and get their chips manufactured by pure-play foundries. We have to see.
IC Insights report can be found here.
Pawan Kumar Fangaria
Founder & President at www.fangarias.com