There's a lesson to be learned from a market for 28nm and lower-geometry wafers from pure-play foundries that is set to triple in 2013 while the rest of the market shrinks, according to market research.
Pure-play foundries need to succeed at the leading edge or they risk falling into decline, according to IC Insights. At present, market leader Taiwan Semiconductor Manufacturing Co. Ltd. is the most successful at following this strategy, the market research firm said in a press release.
TSMC had about $2.1 billion of 28nm sales in 2012, and that is expected to triple to $6.33 billion in sales of 28nm devices for all of 2013, IC Insights estimates. That will give TSMC about a 78 percent share of the pure-play foundries' $8.10 billion sales of 28nm and lower geometry sales in 2013.
The leading edge is where sales growth can be found in the pure-play foundry business.
(Source: IC Insights)
To make its point, IC Insights estimates that all of the increase in pure-play foundry sales in 2013 will come from 28nm and lower-geometry processes, while the revenue from processes above 28nm will decline by 3 percent. Across the pure-play foundry sector, the 28nm and lower geometry wafer sales were worth about $2.7 billion in 2012, compared with the larger-than-28nm wafer market, which was $29.0 billion. As that declines in 2013 to $28.2 billion, the 28nm and lower market will more than triple to $8.1 billion.
Where the profit it is: Volume at the leading-edge brings sales revenue and profit benefits to TSMC.
(Source: IC Insights)
In 2013 51 percent of TSMC's revenue and 50 percent of GlobalFoundries' revenue is expected to come from 45nm and lower-geometry processes. However, in 2013 TSMC is expected to have four times the dollar sales of GlobalFoundries at 45nm and below and 12 times that of United Microelectronics Corp. ($10.33 billion for TSMC, $2.53 billion for GlobalFoundries, and $0.89 billion for UMC). China's Semiconductor Manufacturing International Corp. (SMIC) only started initial production of 45nm technology in 2012 and is forecast to sell only $0.22 billion of 45nm and lower-geometry wafers, according to IC Insights.