Big Customers = Big Foundries, Opens Door for Others

On Wednesday, September 1, 2010, GLOBALFOUNDRIES will be hosting its inaugural Global Technology Conference in Santa Clara. Attendance should be high as we all try to find out what GLOBALFOUNDRIES has up their sleeve to woo new business.

These technology forums are a great way to get broad audience coverage but all the big foundries are targeting the largest and the most advanced semiconductor manufacturers. As I prepare my next foundry report, I can see why big customers are so important. In 2009, TSMC reported that their 10 largest customers accounted for 53% of their total net sales. Back in 2000, TSMC’s five largest customers comprised 30.6% of their total sales. UMC’s top 10 customers account for 65.3% of total revenues and SMICs five largest customers account for 60% of their total sales. In 2008, Chartered Semiconductors top five customers comprised more than 63% of their total sales and with the combined sales of GLOBALFOUNDRIES that percentage is even higher now.

Customer concentration and technology focus does impact the foundry market dynamics. The big foundries are doing well and should continue to see healthy growth for some time. First half 2010 foundries sales were almost double compared to first half 2009. Foundries are not only growing, they are surpassing historical sales records. But as TSMC and Global Foundries focus on large customers, the specialty foundries are grabbing a nice share of the power management, high voltage analog and image sensor markets.

The “More than Moore” foundries grew by 70% in the first half of 2010 over first half 2009. There were a few stellar performers. In 2009, Tower/Jazz did not suffer from declining sales as most other foundries and this year they are on track to experience over 60% growth up to $500 million in sales. The synergies from the Tower and Jazz merger provided them with some great results.

So while GLOBALFOUNDRIES, Samsung, TSMC, and UMC duke it out over the largest fabless and fab-lite semiconductor companies, foundries such as MagnaChip, Tower/Jazz and X-fab are quietly picking up business in the fast growing product segments that utilize mature, specialty technologies.

Can’t wait to see what GLOBALFOUNDRIES has to offer. See you at their Technology Conference.
Joanne Itow
Managing Director