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Technology Stocks : Atmel - the trend is about to change -- Ignore unavailable to you. Want to Upgrade?

To: tech101 who wrote (13090)	8/27/2003 10:30:40 PM
From: tech101	Read Replies (1) \| Respond to of 13565

Is Fab an Advantage? Foundry Watch: Pure-play market to grow 45% in '04 By David Lammers, EE Times Silicon Strategies Austin, Texas -- Pure-play foundry revenues will grow 29 percent this year and 45 percent next-year, more than double the overall growth of the chip industry, according to a mid-year forecast released Wednesday by IC Insights, Inc. Pure-play foundry sales are expected to have a 24 percent compound annual growth rate (CAGR) from 2002 through 2007. That is 14 points higher than the total IC industry CAGR during the same period. Growth rates for the pure-play foundry segment are so robust that a large number of new foundries are setting up, and integrated device manufacturers such as IBM are targeting the foundry sector. The increasingly crowded field will make it difficult for foundries to make money unless they can offer cutting-edge process technology, according to Bill McClean, the president of IC Insights. A pure-play foundry does not offer any standard products of its own, producing ICs only for other companies, according to IC Insights. TSMC, UMC, and Chartered are the main players today. They are being challenged somewhat by new entrants that produce their own chips, as well as offering foundry services, such as IBM, Powerchip, Shanghai Hua Hong NEC, Toshiba, and others. These IDM foundries will almost triple revenues from 2002 to 2007, with a 23 percent CAGR. However, the new entrants will dampen profits somewhat for foundries overall. McClean said that "only those foundries that can consistently offer leading-edge technology have a chance at being consistently profitable. Overall, even being a half step behind in the technology race could spell financial disaster for a foundry." Pure-play foundries hold nearly 80 percent of the overall foundry business this year. That share should remain level over the next few years, even as IDM foundries such as IBM dedicate a portion of their overall fab capacity to foundry work, easing fears that the IDM foundries will pull back capacity to in-house chip production during upturns.