20th October 2009

Fab allocation back on the agenda

As mentioned by Malcolm Penn of Future Horizons in the IEF 2009, “The ‘A’ word is back on the agenda”,
 

But it is not all smooth sailing for the foundry biz. The semiconductor industry’s capex has hit alarmingly low levels. The normal ratio of capex to sales over the industry’s history is 20%. Last year it was 12% and this year it will be 4%. The industry’s overall capacity is now 14% less than it was in Q3.’08. With the economy and market’s forecasted recovery, foundries will be hard pressed next year to meet the demands.
 

And that is where the “C” word comes in – Collaboration and Consolidation.
 

There has also been a lot of talk on consolidation in the foundry biz – as in other areas of the semiconductor industry. There are some pending mergers - between Hua Hong NEC and Grace Semiconductor; Tower Semiconductor’s 2008 purchase of Jazz Semiconductor, proposed acquisition of HeJian Technologies by UMC and the recent purchase of Chartered by GlobalFoundries.
 

Possible future mergers are: SMIC acquiring Cension Semiconductor Manufacturing International and Wuhan Xinxin Semiconductor Manufacturing - two companies which SMIC is managing. And then there are small foundries like Silterra, Altis and Landshunt which are struggling and open to speculation regarding a merger with another manufacturer.”
In all likelihood, as cited by iSuppli, there may be 3 major pure-play foundries left standing after the consolidation – TSMC, UMC and GlobalFoundries.

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This entry was posted on Tuesday, October 20th, 2009 at 10:10 pm and is filed under Semiconductor, Business, Foundry, Mergers & Acquistions. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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