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Semiconductor Foundry Business Grew 5.1 Percent in 2011

Communications equipment is the single biggest application for semiconductor foundries.
The global semiconductor foundry market increased 5.1 percent to $29.8 billion in 2011 driven by mobile applications, according to researcher Gartner Inc.

Strong sales of media tablets and mobile phones prevented a slide in semiconductor demand and foundry revenue, noted Samuel Tuan Wang, research director at Gartner. Compared to 2010 when foundry revenue grew 40.5 percent from 2009, the foundry market in 2011 was "relatively flat.”

Wang also said the growth rate for foundry business slowed in 2011 because of weak PC demand and a reduction of inventory at OEMs that started mid-2011. Oversupply was also a factor in slower revenue growth for foundries in 2011.

“Given the aggressive capital spending by large foundries during 2010 and 2011, the oversupply of foundry capacity was inevitable," said Wang. With oversupply, foundry utilization rates declined from 91 percent in 2010 to 81 percent in 2011.

The semiconductor foundry business in 2011 was dominated by the top five foundry players including TSMC, UMC, GlobalFoundries, SMIC, and TowerJazz. Those five companies accounted for 80 percent of global foundry revenue, Gartner reported.

TSMC, the largest foundry, grew its revenue 9 percent to $13.3 billion. UMC's sales declined 5.8 percent, but with $3.6 billion in revenue, the company maintained its number two position in foundry sales.

GlobalFoundries increased its sales 1.7 percent to $3.5 billion in 2011 and was the third largest foundry, according to Gartner. SMIC’s revenue dropped 15 percent to $1.3 billion and was the fourth largest foundry.

TowerJazz’s revenue totaled $613 million, a 20.4 percent increase over 2010 making it the fifth largest foundry for 2011.

Communications, consumer electronics, and data processing continued to be the three biggest applications driving the foundry business. Communications accounted for 42.7 percent of foundry revenue, while consumer electronics presented 20.9 percent and computing drove about 20.3 percent.

By region, the Americas generated 62.8 percent of foundry revenue; Asia-Pacific, 22.2 percent; Europe, 10 percent; and Japan, 4.9 percent, according to Gartner.