TowerJazz and SMIC sales to surge in 2016, says IC Insi…

Israel-based TowerJazz and China-based SMIC among the world’s top-10 pure-play foundries are forecast to display the highest sales growth in 2016, IC Insights said in a new report.

In 2014, the pure-play IC foundry market registered a strong 17% increase, the largest increase since 2010 and 8pp greater than the 9% increase in the worldwide IC market, IC Insights said. In 2015, the pure-play foundry market showed a 6% increase, about one-third the rate of growth in the previous year, but 7pp higher than the total IC market growth rate of negative 1%.

For 2016, the pure-play foundry market is expected to increase by 9% and greatly outperform the growth rate of total IC market, which is forecast to drop by 2%, IC Insights indicated.

The world’s top-10 pure-play foundries are expected to hold 95% of the total pure-play foundry market in 2016, IC Insights said. The "Big 4" pure-play foundries (i.e., TSMC, Globalfoundries, UMC and SMIC) are forecast to hold an imposing 84% share of the total worldwide pure-play IC foundry market in 2016.

TSMC is expected to hold a 58% market share in 2016, down 1pp from 2015, when its sales are forecast to increase by US$2.1 billion on year, IC Insights said. Globalfoundries, UMC and SMIC’s combined share is expected to be 26% this year, the same as in 2015.

The two top-10 pure-play foundry companies that are forecast to display the highest growth rates in 2016 are Israel-based TowerJazz and China-based SMIC, with 30% and 27% sales increases, respectively, IC Insights said. TowerJazz is expected to grow from US$505 million in sales in 2013 to US$1,245 million in 2016 (a 35% CAGR) while SMIC is forecast to more than double its revenues from 2011 (US$1,220 million) to 2016 (US$2,850 million) and register a 19% CAGR over this five-year time period.

Eight of the top-10 pure-play foundries are based in the Asia-Pacific region. Israel-based TowerJazz, and U.S.-headquartered Globalfoundries are the only non-Asia-Pacific companies in the top-10 group. While LFoundry is currently headquartered in Avezzano, Italy, China-based SMIC agreed in second-quarter 2016 to purchase 70% of the company for approximately US$55 million. Since LFoundry has an installed capacity of 40,000 200mm wafers/month, the acquisition of a controlling interest in the company essentially serves to immediately expand SMIC’s capacity by 13% in 2016.

Although SMIC is forecast to register strong sales growth of 27% in 2016, China-based foundries, in total, are expected to hold only 8.2% of the pure-play foundry market in 2016, down 5.1pp from the peak share of 13.3% reached in 2006 and 2007. IC Insights believes that the total China-based company share of the pure-play foundry market will increase through 2020, as the China-based foundries take advantage of the huge amount of government and private investment that will be flowing into China’s semiconductor market infrastructure over the next five years.

Categories: Bits + chips IC manufacturing

Tags: 2016 China market IC IC Insights sales SMIC

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