Date: 09/09/2009

Shift in semiconductor fab business model impacts semiconductor chipmakers

The acquisition of Charetered Semiconductor by globalfoundries is creating the trend of one-stop shop for fables chip vendors. If this acquisition gets approved Chartered Semiconductor customers, will have access to globalfoudries advanced fab. Otherwise globalfoundries can sell its advanced fab services to Chartered Semiconductor customers. A bit of losers here are semiconductor IC manufacturers with their own advanced fabs, because now small fables companies have better option now in terms of breadth of technology nodes available from TSMC and Globalfoudries. If consolidation happens among the rest of the fabs, it throws even more availability of broader technology nodes from single pure play fab-service vendor.

"The old foundry landscape is under duress," said Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli Corp. "The global recession has opened up a number of opportunities for the strong to get stronger causing a dramatic shift in who will be the leaders in the pure-play foundry market for years to come."

"This acquisition provides Globalfoundries the ability to produce both bulk and Silicon on Insulator (SOI) technology," Jelinek said. "Prior to this, Globalfoundries could only manufacture SOI. But even of larger significance is that prior to the acquisition the company was stuck doing things the way their largest customer - AMD - wanted. This is really not conducive to how a foundry operates. A foundry must be very service oriented. Now, they pick up the infrastructure that Chartered had in place and that's a major boon for them."

As per Isuppli, if this merger of globalfoundries and Chartered goes through, the new pure play fab service provider ranking goes like below:
Rank Company % of market share
1 TSMC 47.7%
2 Globalfoundries 16.7%
3 UMC 14.6%
4 SMIC 5.3%
5 Other 15.7%