Noting that fourth quarter foundry order levels are expected to moderate and show a total revenue fall of approximately US$1.7 billion, compared with the third quarter, iSuppli Corp says that there is now an underlying uncertainty that has emerged in the semiconductor market. However, the market research firm still believes that inventory levels held at the major foundries remains in a balanced state, which means that any increase in end demand will result in revenue increases for the foundry industry.
Global pure-play semiconductor foundry revenue is expected to reach US$5.6 billion in the fourth quarter of 2009, up 53.7% from the same period in 2008. However, the market research firm noted that the fourth quarter of 2008 heralded the beginning of a sharp downturn in the global pure-play foundry business. Revenue in the fourth quarter of 2008 amounted only to US$3.7 billion, a 32.3% and US$1.7 billion plunge from US$5.4 billion during the previous quarter.
“The strong year-over-year rise in pure-play foundry revenue in the fourth quarter paints a deceptively strong picture of industry growth,” said Len Jelinek, director and chief analyst, semiconductor manufacturing, for iSuppli. “The reality is that the fourth quarter is bringing only a moderate expansion in revenue compared to the third quarter. Furthermore, foundries are noting a slowing of orders, indicating an underlying uncertainty in the market.”
iSuppli believes that the foundries also are under pricing pressure at advanced process nodes, as more foundries such as SMIC and Chartered offer 65nm and below processes. However, pricing for more mature semiconductor processes, such as 0.18-micron, is holding steady.
“In early 2009, when utilization rates were low, foundries were willing to cut prices on mature semiconductor processes to fill their fabs,” Jelinek said. “However, with utilization having risen at the end of the year, companies no longer are willing to compromise on pricing for mature technologies.”
Global pure-play semiconductor foundry utilization will increase to 83% in the fourth quarter of 2009, up from an average of 72% in the first quarter.