Revenue at the major semiconductor foundries is set to boom for the next four-years as consumer demand for electronics has returned with a vengeance, according to revised forecasting from iSuppli Corp. Revenue is now expected to top U$29.8 billion, up 42.3% from 2009’s US$22.1 billion. iSuppli previously predicted revenue would rise 39.5 percent this year. By 2014, total pure-play foundry revenue will reach U$45.9 billion, managing a CAGR of 9.4% from US$26.8 billion in 2008, iSuppli said.
“During the first three quarters of 2010, foundries were under intense pressure to meet customer demand,” said Len Jelinek, Director and Chief Analyst for semiconductor manufacturing at iSuppli. “The pressure is leading to increased revenue, as consumer spending has come back with a vengeance following a dramatic downturn in the fourth quarter of 2008 and for all of 2009.”
There has been a recent spate of new capacity expansion plans at some of the major foundries, significantly more than was previously guided earlier this year. Foundries are running at almost full capacity, having kept capital spending well below historical averages for many years.
iSuppli noted that it had not adjusted its forecast for capital expenditures by the foundry segment in 2010. iSuppli still sees foundries spending 123% more on capital equipment in 2010 over 2009.
Much of this spending is going toward developing advanced semiconductor manufacturing processes. Because of this, older semiconductor manufacturing processes in 2010 will continue to suffer capacity constraints, according to the market research firm. This also implies that Integrated Device Manufacturers (IDMs) hoping to achieve increased run rates for legacy technologies won’t find available capacity this year.
There are also looming problems for China-based fabless companies, iSuppli said.
“The era may be coming to an end when fabless suppliers look to China for low-cost manufacturing that could be used as leverage to obtain lower pricing from other foundries,” Jelinek said. “With no significant manufacturing expansions in China during the past two years, and with no major capacity increases forecasted for this year, this prediction may come true quickly.
“Furthermore, state-funded expansion in China has slowed because of the downturn, so the chances of expansion in these semiconductor manufacturing facilities will be minimal, iSuppli believes. Any front-end expansion that occurs will be conducted through the municipal governments. By and large, the financial model used to justify previous expansion has not met investment expectations.”