China's Foundry Industry Competition in 2011

The year 2010 saw a rapid increase in foundry fabs. The output value of the foundry industry increased by 34% to 26.88 billion US dollars. Many manufacturers turn losses into profits, including SMIC, DongbuHiTek, VIS, ASMC, CRMTech, Towerjazz, and X-Fabd. Among them, SMIC made the most progress, jumping from operating profit rate of -90.1% to 1.4%.

After the rapid development in 2010, the foundries of various foundries have full confidence and substantially increased capital expenditure (Capex) to increase production capacity. For example, SMIC has proposed investing RMB 46 billion to increase production capacity. Global Foundries, which is part of the Abu Dhabi Sovereignty Fund in the Middle East, has spent more on capital expenditures. Capital spending in 2011 was twice that of 2010, and it was trying to squeeze UMC into second place in the world.

The outbreak of smartphones and tablets will not benefit the entire foundry industry. Only TSMC and Samsung can give priority to the enjoyment. TSMC is the world's leading fab foundry, with a market share of more than 50%, leading other manufacturers at least six months or more and leading most manufacturers for 1-3 years. The highest-end and hottest IC 95% in the world is OEMed by TSMC. Other manufacturers are the second or third suppliers.

Wafer foundry is not an ordinary electronic product foundry. Tens of thousands of IPlibrary accumulations are barriers that cannot be crossed. There are billions of dollars worth of investment, and huge and excellent talent teams are needed. This is far better than producing a single IC. The difficulty is much higher.

The largest customer of Global Foundry is AMD, and 1/3 of its revenue comes from AMD. While traditional PCs and laptops are strongly impacted by smart phones and tablets, 2011 will be a difficult one year. The management of Global Foundries by the Abu Dhabi Fund is still in the stage of exploration. It may be inevitable that the company will suffer continuous loss for several years or even more than ten years.

In the high-end foundry industry, such as 28-nm node, there is no obvious excess capacity in special product foundry areas (such as HighVoltage/MEMS, etc.), while excess capacity in other areas will continue until 2013, most of the Foundry manufacturers lose money. It will not be avoided.