SAN FRANCISO Chinese companies stormed into the silicon foundry market in the early part of the decade with the supportfinancial and otherwiseof a government determined to make China a force in the global semiconductor industry. Now, a few years and billions of dollars later, at least one analyst wonders if being a top player in the global chip business is still a Chinese priority.
"China attacking the IC marketplace has kind of been a failure," said Bill McClean, president of chip market research firm IC Insights Inc. (Scottsdale, Ariz.). "You don't hear them talking about semiconductor manufacturing as much as they were five years ago."
Semiconductor Manufacturing International Corp. (SMIC) is China's most successful foundry by far, on target for about $1.45 billion in revenue this year, down from $1.55 billion in 2007 and $1.46 billion in 2006, according to IC Insights.
SMIC has reported five consecutive quarterly losses and, despite an aggressive fab expansion plan, has posted few profitable quarters since its inception. The company has been trying to expand beyond memory foundry work into the logic foundry business, but has encountered delays blamed on the inability to obtain the proper export licenses.
According to IC Insights, SMIC will fall to No. 4 in foundry revenue in 2008, slipping behind Singapore's Charted Semiconductor Manufacturing Pte. Ltd., which is projected to post revenue of about $1.85 billion.
SMIC will have more than twice the revenue of fifth-ranked Texas Instruments Inc., according to IC Insights, but trails significantly behind market-leading Taiwanese giants Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC), projected to post revenue of $11.68 billion and $3.75 billion, respectively.
McClean noted SMIC's sagging stock pricethe company's American depositary shares, traded on the New York Stock Exchange, closed at $1.60 Friday (Sept. 19). "They are really going down quick and are looked at as being in trouble," McClean said.
China's second-, third- and fourth-ranked pure play foundries, Hua Hong NEC, HeJian Technology and Grace Semiconductor, are growing, but not as quickly as once hoped. According to data provided by IC Insights Hua Hong NEC and HeJian are both on track to grow about 7 percent this year, to reach $360 million and $355 million, respectively, while Grace is projected to grow 13 percent this year to $350 million.
All three are small time compared to TSMC, UMC and Chartered. Among the world's leading foundries, Hua Hong NEC, HeJian and Grace are ranked 13, 14 and 15 based on projected 2008 revenue, according to IC Insights.