Global IC foundry market rises 16% in 2012, says Gartner

The worldwide semiconductor foundry market totaled US$34.6 billion in 2012, a 16.2% increase from 2011, according to Gartner.

"2012 was the first year that the semiconductor revenue for mobile devices surpassed that of PCs and notebooks," said Samuel Wang, research VP at Gartner. "It also marked the first year that advanced technology for mobile applications drove the foundry revenue. Furthermore, 2012 saw not only major foundries improve the yield of 28nm technology, but also many foundries fine-tuned the device performance of legacy nodes."

The increase in the foundry business was attributed to the restocking of inventory by customers, along with the increased demand of smartphones, in which wafers for advanced technology are required. In the second half of 2012, foundries performed better than the seasonal norm due to the need of 40nm wafers as a result of the unexpected fast rise of low-cost smartphones in China and other emerging countries. Those foundries with sufficient wafer capacity and a good yield of 40nm and 28nm technologies have achieved solid revenue growth.

TSMC maintained the number one spot due to its success of advanced technology nodes, Gartner revealed. Strong performance on 32nm yields and the availability of sub-45nm wafer capacity at the Dresden, Germany, fabs allowed Globalfoundries to advance to the number two position, while UMC's market share decreased due to reduced wafer shipments, Gartner said.

Meanwhile, driven by the wafers consumed by Apple's A6 and A6X chips, Samsung moved up four spots to the number five position with 175.5% growth in 2012, Gartner indicated.

Besides the increased shipment of advanced nodes, there were market share shifts in the more mature nodes, with some foundries reporting near-record-high shipments of wafers of 65nm to 0.18-micron serving power management ICs, high-voltage and embedded flash, CMOS image sensors, and micro-electromechanical systems (MEMS). The market share gain was due to the continuous improvement of device performance and cost savings as a result of process tuning of the legacy process nodes, Gartner noted.

In 2012, most foundries reported an increase of revenue from fabless customers, while the percentage of revenue contribution by IDM customers was flat or even declined, indicating that the chips for mobile devices have been supplied primarily by the fabless companies, Gartner pointed out.

Gartner also issued a separate report indicating the 2012 market for semiconductor manufacturing equipment came to US$37.8 billion in 2012, down 16.1% on year.

"Memory manufacturing-related purchases declined significantly," said Klaus-Dieter Rinnen, managing VP at Gartner. "Continued oversupply in DRAM and the shift to NAND into oversupply led to a reduced need for capacity."

"Logic-related spending provided only a weak counterforce, impacted by slowing overall semiconductor device demand in the second half of 2012 and bulging inventories," Rinnen continued. "Consequently, manufacturing equipment sales realized a declining quarterly pattern, starting in the second quarter through the end of the year."

The back-end segment – especially the wafer-level packaging (WLP)-related segments – outperformed the market. These segments were either tied to the relative strength of logic investments, such as advanced RF or system-on-chip (SoC) test equipment, or to the increasing popularity of bump, flip-chip and other WLP processes, such as stud bump bonding and wafer bonders for through-silicon vias (TSVs), Gartner said.

The process control segments outperformed the total wafer fab equipment market as companies ramped up production at the 32/28nm node and needed increased inspection and defect review tools to monitor increasingly complex processes, according to Gartner. Within the process control segments, e-beam patterned wafer inspection saw the best performance, up 36% in 2012.