Foundry business is not where the money lies

Claims that the foundry business is where the money lies and that Samsung retains the world’s top spot in computer memory chip production have been dismissed as a load of old crap by a leading analyst.

According to an article in the Korea Joongang Daily, the semiconductor industry, especially the foundry business, has been seeing a rise over the past few months. The paper said this was as a result of Samsung, which manufactures custom-made system LSIs, APs, and image sensors for smartphones, under contract with semiconductor companies.

It quoted an analyst who said that unlike the memory market, which were “hugely volatile” the foundry business was more stable.

However, Malcolm Penn, principle analyst at Future Horizons disagreed. He told TechEye: “It’s a load of old crap.

“To say that the foundry business brings in all the money is rubbish. There’s only one foundry that’s ever and still is making a profit and that’s TSMC. All the others are breaking even or seeing a decline. It’s as a cutthroat business as the memory market and if you’re TSMC then it’s good, if you’re not then it’s not so good. TSMC prints money,” he said.

He also criticised thoughts by an industry analyst that claimed Smasung had grown in the foundry business and could in the near future compete with behemoth TSMC, as a result of contracts with the likes of Qualcomm and Apple.

“Samsung isn’t a foundry,” Penn told TechEye. “It just chooses its business carefully. It might get an order off Qualcomm or Apple, which are big companies and prepared to pay good money and offer large orders, and this is how it gets its money.

“It’s picking and choosing the clients – it has to ensure they are big, and offer big money.”

Gartner predicts the global foundry market will continue its expansion over the coming years. It grew 5.1 percent from a year earlier to $29.8 billion last year and the figure is expected to climb by 50.7 percent to $44.9 billion by 2016.