TSMC pulls ahead in foundry market
The latest results from the major foundries have seen TSMC pull further ahead of its competitors. The number-one foundry now has sales more than three-and-a-half times higher than its nearest competitor, UMC. A year ago, it had sales in the first quarter of that were no more than three times higher than UMC’s.
According to the companies’ latest results, TSMC’s sales grew almost 35 per cent year on year for the first quarter to NT$87.5bn ($2.87bn). UMC’s sales grew just over 4 per cent over the same period to NT$24.0bn ($0.8bn). TSMC’s growth was helped by its shift to more advanced process nodes. In the last year, TSMC ramped its production of 65nm processes from almost zero to more than 10 per cent of its sales.
In the first quarter of this year, TSMC claimed 12 per cent of its sales came from the 65nm process a value of approximately NT$10.5bn. UMC’s ramp with customers seems to be lagging, with 7 per cent of its business being based on its 65nm process a total of NT$1.7bn. However, UMC had a slightly larger share of its business coming from 90nm compared with TSMC, although the dollar sales made by TSMC were more than three times higher.
Jackson Hu, CEO of UMC, said the share of leading edge processes 90nm and 65nm would drop slightly in the second quarter from 37 per cent 35 per cent. However, by the end of the year, the share of business coming from the 65nm node should rise to between 10 and 15 per cent, he claimed.
Rick Tsai, president and CEO of TSMC, said the 65nm process will account for more than 20 per cent the foundry’s full-year revenues, indicating that the share by year end will be higher than 20 per cent.
TSMC has already launched what it calls 45nm and 40nm, with volume production of the more advanced node to begin later this year. On his company’s progress with leading-edge nodes, UMC’s Hu told analysts on a conference call to discuss first quarter earnings: “We are working closely with early adopters of 45nm and 40nm...we may have small production by year end. We are developing 32nm with customers as well.
“The applications that can use this state-of-the-art process technology are very few and include GPUs [graphics processors], cellphones and high-end consumer applications,” Hu claimed.
TSMC pulled ahead of SMIC and Chartered Semiconductor, and the Chinese foundry dropped behind Chartered in the foundry rankings after overtaking the Singaporean fab operator last year. According to Gartner, the top four foundries accounted for 72.5 per cent of the foundry market.
Chartered’s sales increased 19 per cent year on year to $388.2m; SMIC posted a loss of $119.1m as it quit the commodity DRAM business and sales dropped 6.7 per cent year on year to $362.4m.
At Chartered, the 65nm process accounted for 10 per cent of sales $38.8m in the first quarter. “Two additional 65nm customers are expected to enter production ramp in the second quarter,” claimed Chia Song Hwee, president and CEO of Chartered. Although Chartered is not yet making 45nm wafers in volume, he told analysts that the company is “seeing higher activity for 45nm” compared with the situation for 65nm at the same stage in that process’ development. Chia said the foundry expects to start shipping production wafers in the second quarter of next year: two years after it started 65nm shipments. He claimed the schedule for 45nm is “pretty consistent with what our customers are telling us”.
George Thomas, CFO of Chartered said: “Revenues from 90nm and 65nm, including both SOI and bulk technologies, grew approximately 10 per cent compared to fourth quarter 2007, and represented 17 per cent of our total business base revenues.”
The 130nm process continues to hold the largest share of Chartered’s sales, whereas at TSMC and UMC the 90nm process has taken over in terms of revenue.
To try to continue its growth, TSMC president Rick Tsai told analysts the company is now looking to make CPUs. “We are working with more than a couple of customers on standalone CPUs, not to mention embedded CPUs,” said Tsai, but he warned that the standalone CPU business will take time to develop into high volume for the company. “Our technology may not be as good as Intel’s, from a transistor point of view, but I think our technology is now good enough to serve certain segments of the CPU market.”
TSMC recently said it would introduce a metal gate option for its 32nm process the move to metal gates from polysilicon will help improve transistor performance and allow the company to target CPU designs that call for high clock speed rather than low-power consumption.
Image: TSMC is shipping many more wafers than its nearest foundry competitors