The following article was provided by Joanne Itow, a senior analyst at Semico Research Corp., a market research firm in Phoenix, Arizona.
Once again the foundry market in 2003 kept us entertained with mixed sales results, a rotation of management faces, and a series of new customer wins and foundry partnerships.
The first quarter was characterized by less than 65 percent capacity utilization at the large dedicated foundries. Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) reported lower sequential first quarter sales, while Chartered Semiconductor Manufacturing Pte. Ltd. and United Microelectronics Corp. (UMC) experienced 2-to-13 percent revenue increases.
As Semico expected, the second half of the year is playing out with a boom in demand. Capacity utilization is going to be above 90 percent for TSMC and UMC and even Chartered will close out the year with almost 70 percent utilization.
IBM Corp.'s Microelectronics Corp. continued its successful entry into the market with the announcement of such high profile customers as Intersil, Nvidia and Xilinx. The entrance of IBM as a leading edge foundry caused all foundries to reaffirm the fundamental tenants of the foundry business, i.e. customer service, quality product and production delivery.
Chartered defied its detractors and showed marked improvement in both technology offerings, as well as financially. Chartered's joint technology partnership with IBM has provided a new formula for success.
UMC seems to have settled in with a new CEO, Jackson Hu. Silterra and First Silicon are moving to the next level with new leadership as well.
So what should we expect in 2004? More of the same? No. This market has never provided us with a predictable two year run on any trend. With an expected 35 percent growth in foundry wafer sales, next year will be challenging because of the increased demand which will come from fabless companies, IDM companies and even system houses.
The under investment that occurred during the past two years will play out in a real juggling performance in 2004. The foundry winners will include those that continue to service their customers with a focus on quality products and a mutual goal of maintaining profits. 2004 will be a good year. The challenge will be to make it good enough to last for more than just one year!