Wafer Capacity Could Fall Short In 2000
Semiconductor Business News - 11/30/98, 8:07 p.m. ET
Third-party wafer-foundry capacity could end up in short supply by
the year 2000 if chip manufacturers increase their use of contract
manufacturing, said a new report from Semico Research in Phoenix.
Currently, there is a glut of silicon-foundry capacity, but Semico said
that condition could quickly change if major semiconductor makers
decide to shift more of their wafer processing to third-party fabs at a
time when chip markets begin recovering from the current slump.
The Phoenix market researcher estimated that demand for processed
wafers is increasing at a compound annual growth rate of 13 percent
over the next five years. Silicon-foundry demand is expected to grow
at 21 percent in the five-year period.
Today, fab-operating chip suppliers -- known as integrated-device
manufacturers, or IDMs -- get about 5 percent of their processed
wafers from foundries, according to Semico's report. If IDMs
increased their use of foundries to about 10 percent of their processed
wafer, the silicon-foundry business could grow 40 percent, which
would lead to a potential shortage of capacity in 2000, the report said.
A number of major IC manufacturers are planning to increase their
use of outside foundries as part of a restructuring of their business
models and a hedge against uncertain times. Motorola, for example,
intends to get 30 percent of its chips from third-party foundries by
2000 compared to just 7 percent last year. In four years, Motorola
wants to move 50 percent of its wafer-processing needs to outside
foundries.
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