By the end of the year there could be only three remaining sources for high volume, leading-edge semiconductor foundry manufacturing.
It is thought that United Microelectronics and Semiconductor Manufacturing International will be providing high volume foundry manufacturing, but at the slightly less cutting-edge 32 and 28nm.
“The enormous cost of advanced semiconductor process technology is whittling down the ranks of leading-edge foundries, with just three firms likely to remain at the end of the year,” said Len Jelinek, director and chief analyst of semiconductor manufacturing at IHS.
“Unless additional foundries join the party, semiconductor companies will face minimal competitive choices when it comes to advanced chip geometries.”
According to iSuppli’s research Intel may decide to use some of its advanced manufacturing capacity in 2011 and offer foundry services to design companies and fabless semiconductor suppliers that are incorporating the Atom microprocessor into their designs.
This would represent a dramatic change of philosophy at Intel, though it means that there is potential it could lead to significant revenue growth as well as more favourable asset utilisation.
Although Japan has long been seen as a leader in the development of new technologies, iSuppli points out that there are likely to be no Japanese suppliers manufacturing with 32nm or smaller processes by the end of the year.
However, Japanese equipment suppliers will be able to get ahead of their competitors in the market if they are supplied with the appropriate funding.
If this were to happen, 2011 has to be the year that Japanese companies come out of their shells and become active in the foundry business. The alternative is that the Japanese semiconductor industry could suffer greatly if it chooses to remain in the sidelines.
Overall it is expected that TSMC will be the leader in the foundry market in 2011 as it owns 50 percent market share of the foundry space, as well as possessing leading technology and having access to the most available capacity.
If TSMC begins selling directly to the merchant market it could become the largest supplier of semiconductors, even potentially taking over from current leader Intel.
This comes down to how much business rival firms such as Samsung, GlobalFoundries and Intel are actually able to take from TSMC.
For example Samsung has already stated its goal of becoming the world’s leading supplier of semiconductors, which would mean that it would have to surpass Intel in terms of revenue. In order to achieve this it would be necessary to become more aggressive in both memory manufacturing and the foundry business.
Meanwhile, Intel, Samsung, GlobalFoundries and TSMC are expected in 2011 to outperform the other foundries. All four companies have the technology, capacity and the money needed to maintain leadership within their segments.
Intel recently told TechEye that it was planning leading edge technology at its plant in Leixlip, Ireland, though the decision for which process is yet to be decided. It was also announced recently that development had begun on upgrading it Israel plant to a 22nm process.