Tuesday, 29 August 2006

Semiconductor Manufacturing in Asia on a Strong Growth Curve

The Asia Pacific region is currently witnessing the fastest rise in semiconductor sales, which was up 12.8 percent in June, compared to the year-ago period. IT research firm In-Stat predicts that annual semiconductor consumption is booming in the...

The Asia Pacific region is currently witnessing the fastest rise in semiconductor sales, which was up 12.8 percent in June, compared to the year-ago period. IT research firm In-Stat predicts that annual semiconductor consumption is booming in the Asian market and will jump to USD 203 billion in 2010 from USD 136.5 billion in 2005.

In-Stat further predicts the semiconductor business in Asia to grow. "With the semiconductor food chain already strongly established in Asia—including design, EDA, IP firms, and testing and packaging services—the long-term outlook indicates that Asia’s position in semiconductor production will continue to strengthen," said In-Stat.

Most of the electronic manufacturing from the US and Europe have now shifted to low-cost regions in Asia, resulting in Asia being the largest manufacturing base for electronics today. Factors like price advantages and emerging fabrication-less companies have given a push to Taiwan’s foundry to become the highest fabrication density area.

"With the foundry business centered in Taiwan, and major memory makers located nearby in Japan and South Korea, China is expected to drive the next manufacturing growth wave in Asia," says Mayank Jain, In-Stat analyst. "Many IDM and foundry players in China are already expanding their production capacities."

China currently leads the market not only in Asia but globally. India is another growing market in the region but In-Stat said that the country still has a long way to go before they come anywhere near China.

The Asian foundries are major revenue contributors in the global market. In 2005, the revenue contribution of Asian foundries was close to 91 percent at USD 16.56 billion in the overall revenue of USD 18.24 billion. In-Stat predicts the revenue from Asian foundries to almost double to USD 31.8 billion in 2010. TSMC and UMC are the leading foundries in Asia and will account for over 50 percent of Asian capacity through 2009.

In-Stat business competition in the market to heat up with among top foundry players offering advanced process technology with Samsung venturing into the leading-edge foundry business. Amidst this competition, In-Stat said China would continue to offer low-cost fabrication on older technologies.