Wafer market becoming more top-heavy as industry moves toward 300-mm

By Colleen Taylor, Contributing Editor -- Electronic News, 6/28/2007

The semiconductor industry has become markedly top-heavy, according to a recent report that shows the leaders of the wafer fabrication pack are now enjoying a hefty amount of control and power over the worldwide chip market.

According to a report issued this week from market research firm IC Insights, the top-five wafer capacity leaders accounted for 32 percent, or about a third, of total wafer capacity as of year-end 2006. At the same time, 48 percent, or about half, of the world's capacity was represented by the combined capacity of the top-10 leaders—indicating that relatively few companies control a very large portion of the IC industry's supply of wafer fab capacity.

Samsung, TSMC, Intel, Toshiba, and UMC had the five largest shares of the world's capacity at the end of 2006, with combined capacity of just over 2.9 million wafers per month in 200-mm-equivalent wafers.

Geographically, IC Insights noted that the top-10 capacity leaders represent a diverse group with three based in Taiwan, two in South Korea, two in the United States, two in Japan, and one in Europe.

The firm pointed out that the strength of pure-play foundries like TSMC and UMC were evidence of the importance of moving to 300-mm wafer production in industry success.

"IC manufacturing is increasingly becoming a high stakes poker game with enormous up-front costs of $3 billion to $3.5 billion for a 300-mm wafer fab," IC Insights said in its report issued this week. "With fewer and fewer firms willing and able to make the investment in high-volume state-of-the-art fabs, the pure-play foundries are playing an increasingly vital role in providing the industry with a reliable and consistent supply of wafer fabrication capacity."

Indeed, in recent months, the top-five wafer fab players -- Samsung, TSMC, Intel, Toshiba, and UMC -- each have 300-mm investments in common. The top five companies have each made serious headway in the migration to producing larger wafers by investing billions of dollars each into new fabs with 300-mm capabilities.