Since the 1980s, foundry, a unique business form in the semiconductor chip manufacturing industry has maintained a fast growth momentum. In the past few years, the global foundry market has grown even faster. In 2006, market size reached $23.274 billion. During the 4 years between 2002 and 2006, the market grew at a CAGR of 19.8%, far higher than the growth of the global semiconductor market during the same period.

Currently, pure-play foundries have gradually gained a dominant position in the global foundry market. During the 4 years between 2002 and 2006, pure- play foundries saw their sales revenues grow at a CAGR of 22.2%, far higher than the 9.7% CAGR of Non-pure-play foundries. Correspondingly, pure-play foundries saw their percentage of the total sales revenues in the global foundry market rise to 84.7% in 2006 from 78.3% in 2002.

In terms of structure, 300mm product lines and 90nm and under processors now account for a rising percentage of the sales revenues in the global market, reaching 19.9% and 18.7% in 2006 from 15.2% and 0% in 2002, respectively. As market demand grows fast, global foundry production capacity also grows fast. Between 2002 and 2006, global foundry production capacity expanded by 60%, reaching 23.56 million pieces/year (converted to 200mm silicon chips). 300mm production accounted for 18% of the total production capacity, while 90nm and under processors 14.5%.

As for brand structure, the global foundry market is currently controlled by 4 enterprises, namely TSMC, UMC, Charter and SMIC. In 2006, these 4 enterprises accounted for 69.5% of the global market. TSMC alone got a market share of 43.3%.

The Chinese market
Symbolized by the establishment of CSMC-HJ (now CSMC), China's foundry industry can be traced back to the 1990s. But, the market only achieved major growth in the true sense when a number of foundries including SMIC and Grace Semiconductor were put into operation in 2001. Statistics show that during the 4 years between 2002 and 2006, sales revenues in China's foundry industry expanded 6.8 times, with a CAGR of 67.2%. In 2006, China's foundry industry reached a size of 22.059 billion Yuan, accounting for 12% of the global market.

While sales revenues expand fast, China's foundry production capacity grows even faster. Between 2002 and 2006, the country saw its foundry production capacity expand 1.5 times, reaching 7.17 million pieces/year (converted to 200mm silicon chip), accounting for 27.2% of the global production capacity. In terms of wafer size and line width, foundry production capacity in China is still mainly dominated by 6 & 8inch and 0.35-0.11 micro processors. In 2006, 8inch wafers and 0.35-0.11micro processors respectively accounted for 53% and 55.7% of China's overall foundry production capacity. 12inch and 90nm processors were few, only accounting for 4% and 2.5% of the overall production capacity, respectively.

In terms of development trend, the foundry market and industry will continue to grow fast both at home and abroad. In the next 5 years, the global foundry market is expected to have a CAGR of 11.7%, while sales revenues in China's foundry industry will grow at a CAGR of 17.9%, reaching 50.336 billion Yuan ($6.537 billion) by 2011, accounting for 15.9% of the global market then. By that time, China will become a major foundry industry hub in the world.