If we look at the cost of future technologies, it will be hard for the smaller foundries to continue on their own. See earlier blogs; TSMC: Single-Customer (Apple? Qualcomm?) Fabs Make Sense , the cost issues were discussed in several earlier blogs starting in the March blog Moore's Law End? (Next semiconductors gen. cost $10 billion)
The article below also mentions that "the combined sales of the four Japanese companies in the top 20 ranking (Toshiba, Renesas, Sony, and Fujitsu) dropped 16% in 2Q12 as compared to 1Q12". Additional signs of Japanese fabs deteriorating position is the March blog Are Japan's Fabs stuck above 28nm Process Technology?.
Foundries Soar While Most Japanese Companies Crash in 2Q12 Ranking
GlobalFoundries jumps five spots and now ranks 16th in the first half 2012 ranking.
August 02, 2012 -- A ranking of the 1H12 top semiconductor suppliers will be included as part of IC Insights' upcoming August Update to The McClean Report. As shown in Figure 1, there are three pure-play foundries in the top 20 ranking. In total, these foundries logged a 20% increase in 2Q12/1Q12 sales. In fact, TSMC’s capacity utilization rate in 2Q12 was 102% (exceeding 100% because of the way the company defines its utilization rate). With the continued success of the fabless companies as well as the strong movement by many IDMs (Integrated Device Manufacturers like TI, Renesas, ST, etc.) to the fab-lite business model, IC Insights expects the IC foundries to witness very strong demand for their services over the next few years.
GlobalFoundries’ 2Q12 sales jumped by 18%, which helped move the company past UMC to become the second-largest foundry in the world. Currently, GlobalFoundries is ranked as the 16th largest semiconductor supplier worldwide and IC Insights believes the company has a good chance of surpassing Fujitsu in full-year 2012 sales to move into 15th place.
In contrast to the excellent performance of the foundries, the combined sales of the four Japanese companies in the top 20 ranking (Toshiba, Renesas, Sony, and Fujitsu) dropped 16% in 2Q12 as compared to 1Q12, with Sony being the only Japanese company to register quarterly growth. However, things may not be as bad as they appear for some of the Japanese companies as Renesas is currently expecting a 3Q12/2Q12 semiconductor sales increase of 24% and Toshiba has not yet changed its relatively aggressive full-year fiscal 2013 (ending March of 2013) guidance, which suggests it may be expecting a strong rebound in sales later this year.
Ninth-ranked Micron is now set to acquire bankrupt Elpida, another struggling Japanese company that is currently ranked 24th in the world. If this occurs, Micron would likely add between $2.5 and $3.0 billion in revenue to its annual sales, which could move the company up one or two positions in the ranking. This acquisition would also end Japanese company involvement in the DRAM market, a market they once dominated in the 1980s and 1990s.
Figure 2 illustrates that there was a wide range of 2Q12/1Q12 growth rates among the top 20 semiconductor suppliers. In total, the top 20 semiconductor suppliers showed a 3% increase in 2Q12 sales as compared to 1Q12. This figure is three points less than the total 2Q12 worldwide semiconductor industry growth rate of 6%. In fact, when excluding the top three foundries—TSMC, GlobalFoundries, and UMC, the combined sales of the remaining 17 companies in the top-20 ranking logged a sales increase of only 1% in 2Q12.
Figure 2As shown, Toshiba ranked as the worst performing top-20 company in 2Q12, registering a steep 26% 2Q12/1Q12 sales decline. This drop was due almost entirely to the poor performance of its memory segment (primarily NAND flash), which saw a dramatic 40% 2Q12/1Q12 sales collapse (a decline of about $800 million). As has been recently reported, the company plans to cut its NAND flash production by 30% in response to this situation. In contrast to its memory sales, Toshiba’s 2Q12/1Q12 logic IC sales were down only 9% and its O-S-D (optoelectronics, sensors, and discretes) sales were flat. It is interesting to note that SanDisk, Toshiba’s NAND flash memory partner, encountered a much more moderate 2Q12/1Q12 sales decline of 14%.
After reviewing the top 20 companies’ 3Q12 outlooks, it appears that the top 20 semiconductor suppliers, in total, are likely to show a 5% increase in sales in 3Q12 as compared with 2Q12. While this level of growth is not very exciting, it is only one point below the past 30-year average third quarter total semiconductor market increase of 6%.
Several major product introductions are set to occur in 4Q12 that could potentially bring additional momentum to the semiconductor market at the end of this year. The release of Apple’s newest version of its iPhone (iPhone 5) is expected no later than October. Moreover, Microsoft’s Windows 8 operating system is the first major upgrade to its OS in several years and is scheduled to be released in 4Q12. Also, Intel reports that numerous new ultra-thin but powerful Ultrabook computers will debut in 4Q12, some priced as low as $699. In total, IC Insights expects a 4Q12/3Q12 semiconductor sales increase of 2% and a full-year 2012 semiconductor market increase of 3%.