Mainland China Foundry bumpy road but still can grow

According to market research firm Semico Research, although the semiconductor industry is expected to achieve two digit growth in the next few years, but the foundry industry China in mainland China will be difficult to further increase their market share.

Semico CEO Jim Feldhan said: "China, foundry in the next three to five years will have a difficult time, but they still rely on domestic demand for growth, which rely on in local and is willing to cooperate with local suppliers manufacturers."

That Feldhan in the Taiwan area of Hsinchu science and Technology Park spoke to a group of industry executives, SMIC (SMIC) and grand force semiconductor (Grace Semiconductor) and other mainland foundries are still in the fight for the customer trust is at an early stage, or the equivalent of some foundries in Taiwan 10 years ago the stage.

Feldhan said he did not ignore the rise of Chinese, foundry industry, the domestic market is growing, and engineers in the gradual accumulation and deepen their experience of technology. "Think about it, three years ago, no one thought that China would have a 300 mm factory, some people think that Chinese manufacturers are using the technology of 0.50 or 0.25 microns." "The situation has changed very rapidly in the past few years," he said."

He believes that due to the strength of veteran manufacturers on the new plant construction in billions of dollars in investment required, and maintain a rapid pace in technology development, market situation for foundry China, it will only become more and more serious. In addition, Samsung Electronics (Samsung) such latecomers may also become their strong competitors in the next few years.

Chinese last year, the foundry industry's share of the global market share of about 13%, higher than 4% in 2002. According to IC Insights data, in 2010 the market share is expected to increase by less than one percentage point per year, by 2010 the scale will reach about $7 billion 500 million. But in the same period, the overall CAGR of the foundry industry will reach 21%.

Semico Feldhan also reiterated the previous forecast in 2015 that the semiconductor industry will reach $578 billion, a compound annual growth rate of 10%. Semico expects to grow by 17% this year, of which about $2/3 comes from unit shipments and the rest from the average selling price (ASP). Semico estimates chip manufacturers in 2006 inventory is low, which will help stabilize prices and continue to promote increased capacity utilization. Feldhan pointed out that the current average capacity utilization of the foundry industry is about 90%, leading individual manufacturers may reach 95%-98%, the first half of 2006 will be basically maintained the situation.

"Let's wait and see the reverse trend. Is shifting from buyer's market to Seller's market." Feldhan predicts that the next downturn will be 2009.