Semiconductor pure-play foundry sales will rise a hefty 52% to $17.17 billion in 2004 as more chip companies outsource their IC production, according to market researcher IC Insights.
A pure-play foundry is a company that does not offer a significant amount of IC products of its own design, but focuses on producing ICs for other companies.
The pure-play foundry business is getting more competitive as more companies enter into the market. In 2003, foundry market leader TSMC had record sales but lost two percentage points in market share because of foundry startups who jumped into the fray.
While more startups are entering the market, four companies dominate sales: TSMC, UMC, Chartered and SMIC.
The companies are adding capacity to keep up with demand. For instance, SMIC plans to double its capacity in 2004 and 2005. The "Big 4" foundries will be aggressive capital spenders. "The four will increase capital expenditures by a whopping 183% to $7.2 billion," says IC Insights. The overall semiconductor industry is expect to increase capital spending by 53% in 2004.
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