iSuppli raises 2010 foundry forecast; interesting lessons to learn for India from China's story!

Yesterday, iSuppli raised its revenue forecast in 2010 for pure-play semiconductor foundry revenue, owing to the renewed demand for consumer-oriented electronics products.

Len Jelinek, director and chief analyst for semiconductor manufacturing, iSuppli.

“During the first three quarters of 2010, foundries were under intense pressure to meet customer demand,” said Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli. “The pressure is leading to increased revenue, as consumer spending has come back with a vengeance following a dramatic downturn in the fourth quarter of 2008 and for all of 2009.”

iSuppli has raised its revenue forecast for all semiconductor foundry activity for 2010 to $29.8 billion, up 42.3 percent from 2009’s $22.1 billion. It had previously predicted revenue would rise 39.5 percent this year.

By 2014, total pure-play foundry revenue will reach $45.9 billion, managing a CAGR of 9.4 percent from $26.8 billion in 2008. Pure-play foundries are contract manufacturers whose business consists of producing semiconductors on behalf of other chip companies.

Thanks to my good friend Jon Cassell, I managed to hook up with Len Jelinek to find out more.

Enhancing foundry forecast
I started by asking Jelinek what were the chief reasons for enhancing the foundry forecast. Jelinek said: “The forecast increase is based on the anticipated strength in demand for products in Q2 and beyond. Additionally, it is also simple math. The foundry market had a good Q2, and last year, Q1 and Q2 were quite challenging. So, by having a good first half of the year, the percentage must increase.”

Also, given that there has been renewed demand for consumer electronics products, what are the specific CE products, besides netbooks, mobile phones, that have been seeing renewed demand, and why?

He added that televisions have shown significant growth. “Also, if you look at all of the consumer products that are growing — they are the new products that require advanced chips. The foundry suppliers are the primary suppliers of advanced technology 45nm and below. These are also the most expensive products that a foundry manufactures. This of course means that the revenue will go up. This trend will continue into the future because, with the exception of Intel, Samsung, IBM and Toshiba, there are no IDMs that have large volume production capacities at 45nm.”

GlobalFoundries enabling the next wave of 'foundry' innovation

According to Mojy Chian, Senior Vice President, Design Enablement, GlobalFoundries, continued innovation in the foundry business demands a new approach. He was speaking at the recently held International Electronics  Forum (IEF) 2010 organized by Future Horizons in Dresden, Germany.

GlobalFoundries is bringing a highly integrated model to foundry, which involves the extension of customer operations, early customer-foundry engagement, as well as close collaboration and joint technology development. This would enable faster time to volume and market, leading to smooth ramps to mature yields. Chian added that design, manufacturing, and EDA/IP solutions must work in unison to accomplish this.

According to him, the industry desperately needs a new approach. Here, he discussed GlobalFoundries’ 28nm collaborative innovation, which involves four phases.

Phase 1: Exploration

* For advanced technology, foundry engagement begins 2.5 years before product tapeout.

* Starts with exploration of design architecture, specification, and methodology.

* Foundry value proposition drives corresponding process selection.

* Early engagement locks in the process to the customer’s design requirements.

Phase 2: Optimization

* Design architecture and IP development begins.

* Performance, power, density, cost, TTM targets analyzed.

* Trade-off analysis of design and process targets, TTM, and manufacturability.

* Design and process technology are co-optimized.

Phase 3: Iteration

* Initial process and design test structures taped out.

* Process targets frozen – PDK 0.1 is released.

* Design implementation methodology finalized.

* Design performance and power targets are defined.

Phase 4: Implementation

* Concurrent and target-driven process and design implementation.

* Fine tuning of process and design – design implementation in high gear.

* Test chips taped out, chip level validation, PDK 0.2, 0.5, 0.9, and 1.0 released.

* Incremental march towards process qualification and risk production.

The ultimate goal: process qualified on same day as tapeout! Target-driven technology development and design enablement are at the core of accelerating time-to-market.

Design Enablement at GlobalFoundries is said to be an unique approach to bridging the gap between design and manufacturing. There is close collaboration and early engagement. Although product engineering heritage is not typically found at foundries, GlobalFoundries has been able to make use of the best practices from Chartered’s foundry experience.

All of this leads to optimized performance, leakage and yields, accelerated time to market, reduced design and manufacturing risks, integrated system-level functionality.

Dongbu HiTek comes India calling! Raises hopes for foundry services!!

Find this a bit difficult to believe? Yes, its true! Top executives from South Korea’s Dongbu HiTek, which ranks among the semiconductor industry’s leading foundries, came India calling at an event organized by the India Semiconductor Association (ISA) this week, where I happened to be an attendee.

On first impression, Dongbu’s seminar on foundry services surely raises a lot of hope that India could eventually have an ‘active foundry services provider’ after all! And definitely, a player, who won’t be that expensive, one hopes, should it happen.

There’s a reason why I am using the term ‘active foundry services provider.’

While, Dongbu’s visit may not mean that India can have an actual foundry or foundry services overnight, instead, the country could well have a foundry services player, who, I felt, is quite serious about India and the Indian semiconductor industry. However, what all of this will translate into eventually, remains to be seen, as these are still very, very early days. And, Dongbu is still exploring India!

Lou N. Hutter, senior VP and GM, Analog Foundry Busines, Dongbu HiTek.

Lou N. Hutter, senior VP and GM, Analog Foundry Business and Aabid Hussain, VP of sales and marketing, Dongbu HiTek Semiconductor Business conducted a workshop on Feb 9, co-ordinated by Mandate Chips (an ISA member) and supported by the India Semiconductor Association (ISA).

Operating two world class wafer fabrication facilities — in Bucheon and Sangwoo — and leveraging key technology achievements spanning two decades, the company continues to meet the needs of fabless ventures. Its business philosophy is driven by an aggressive mission to deliver the highest quality product backed by the most responsive customer service. Overarching this mission is the vision to become the best-in-class supplier of foundry services.

To realize this vision, Dongbu HiTek pursues a “collaborate and thrive” growth strategy. Accordingly, the company continues to maintain close relations with customers and has put in place an advanced business model that adds higher value to its products and services.

Headquartered in Seoul, Dongbu has two foundries – one in Bucheon and the other in Sangwoo, both in South Korea. Fab 1 in Bucheon has a monthly capacity of 54,000 wafers in the 0.35, 0.25, 0.18 and 0.15um technology nodes. The main technologies include logic BCD, analog CMOS, HVCMOS, etc. Fab 2 in Sangwoo has a monthly capacity of  34,000 wafers in the 0.25, 0.18, 0.11um and 90nm nodes. The main technologies include logic, mixed signal, flash, RFCMOS, CIS, HVCMOS, etc. Fab 1 was acquired from Amcor in 2001 while Fab 2 has been built grounds up.

Aabid Husain said, “As we move out to higher volumes and smaller nodes, we will do new technology nodes in Fab 2.” Taiwan has been among Dongbu’s key markets and MediaTek is among its leading customers. Dongbu also has a long association with Japan. Hussain said that Toshiba has been Dongbu’s technology partner, and also draws a lot of wafers from Dongbu’s fabs. Dongbu has an office in Santa Clara, USA, and started another office in Austin last year. It plans to add another office in Boston during Q3-2010.

Husain also highlighted Dongbu’s YourFab service. An easy-to-use web based system, it facilitates real-time WIP monitoring. The service is accessible at all times from anywhere. It provides design kits and technology reports, besides PC and inline data.

Dongbu HiTek’s ShuttleChip program allows customers to share a single MultipleProject Wafer (MPW) to verify the performance of their respective prototype designs in silicon before committing to volume production. Husain said, “Indian companies can take great advantage of this program.

The ShuttleChip Program reduces the cost-burden of manufacturing chips while it also engages foundry customers at the early phase of prototype development. Accordingly, it sets the stage for close collaboration between Dongbu HiTek and its foundry customers throughout the entire manufacturing process.

TSMC leads 2009 foundry rankings; GlobalFoundries top challenger!

The leading IC foundries of 2009. Source: IC Insights

Recently, IC Insights released the rankings for the world’s top pure-play and IDM foundries. No surprises, as TSMC continues to lead! The surprise entrant is of course GlobalFoundries, which ranked fourth, after having started operations in March 2009.

However, all of the foundries, barring Tower Semiconductor, registered negative growth during 2009. Tower, which acquired Jazz Semiconductor in 2008, was the only foundry to post positive growth during 2009.

IC Insights further stated that if the revenues of Chartered Semiconductors, which was purchased by GlobalFoundries recently, were combined with GlobalFoundries, their combined sales would have amounted to over $2.6 billion in 2009. That’s not very far from UMC, which is ranked no. 2!

Now, I am not an expert to comment on which foundry has done really well, despite the recession, or whether GlobalFoundries can really challenge and overtake TSMC in the future. However, I followed with great interest a discussion on one of my groups on LinkedIIn on this topic.

Daniel Nenni, a critically acclaimed blogger, and an industry colleague, had recently blogged on this subject. There were some interesting comments following that post. I sought the permission of Malcolm Penn, chairman and CEO, Future Horizons, to use some of his remarks for my blog post.

Penn said that there is a reason why TSMC is the no. 1 foundry in the world. However, as competition breeds innovation, hence, the foundry business will be much more interesting to watch with GlobalFoundries challenging TSMC.

He added: “There was also no reason why Intel is #1 in PC MPUs or Microsoft #1 in PC OS except for one key factor. Once a competitor gets to be a certain size, no amount of innovation will help swing the balance of power.” The real question therefore is: “Has TSMC now passed this tipping point?” I fear it already has.”

Fact of the matter is in the foundry business capacity is king and TSMC already outguns all of the other competitors combined. Given the minimum two to three year lead time to build and ramp new capacity, TSMC has incredibly clear visibility to see any competitive threat coming.

Very interesting! Some other observations later!