An Overview of the Top 5 Semiconductor Foundry Companies
Microchips are needed almost everywhere. They're at the heart of the devices that we use to work, entertain, travel and more. For example, they help power our smartphones, wearables, industrial robots, game consoles and even MRI scanners.
However, there has been a shortage of semiconductor chips. Some reasons include a sharp rise in demand and supply chain disruptions due to the pandemic. And while shortages are expected to continue easing through the last quarter of this year, IDC expects the industry to normalize and balance by the middle of 2022, with the potential for overcapacity in 2023 as larger scale capacity expansions begin to come online towards the end of next year.
As the semiconductor market is expected to grow by 17.3% in 2021 versus 10.8% in 2020, here’s an overview of the top global semiconductor foundry players in terms of market share based on 2021 estimates by TrendForce. A semiconductor foundry, commonly called a fab, refers to a factory where devices like Integrated Circuits (IC) are manufactured.
1. Taiwan Semiconductor Manufacturing Company
Taiwan Semiconductor Manufacturing Company (TSM), which was established in 1987, dominates 55% of the market share.
“By choosing not to design, manufacture or market any semiconductor products under its own name, the Company ensures that it never competes with its customers,” the company says on its site. “And so, the key to TSMC’s success has always been to focus on its customers’ success.”
The Taiwan-based company reported a revenue of $45.5 billion in fiscal 2020, up from $34.63 billion in 2019. The company also has a well laid out future R&D plan. TSMC spent around $3.8 billion on R&D, which is equivalent to 8.3% of its revenue.
According to its website: “For advanced CMOS logic, TSMC’s 3 nanometer (nm) and 2 nm CMOS nodes continue to progress in the pipeline. In addition, the company’s reinforced exploratory R&D work is focused on beyond-2 nm node and on areas such as 3D transistors, new memory, and low-R interconnect.”
Earlier this year, the company announced its plans to invest $100 billion over the next three years to increase capacity at its plants. It was the sixth highest recipient of patents in 2020 and was awarded 2,833 patents in 2020, an increase of 22% over 2019.
Samsung is Taiwan Semiconductor Manufacturing Company’s closest competition with a 17% market share. The South Korean conglomerate began its foundry business in 2005 and established it as an independent business unit in 2017. Samsung's Foundry Business supports global fabless and IDM semiconductor companies.
In May 2021, Samsung Electronics announced that it will increase its investments in the System LSI and Foundry businesses through 2030 to a total of ₩171 trillion. The plan represents an increase of ₩38 trillion from the previous commitment of ₩133 trillion, which was announced in April 2019. Samsung is constructing a new production line in Pyeongtaek, which is expected to be completed in the second half of 2022 and equipped to produce 14 nm DRAM and 5 nm logic semiconductors, both based on extreme ultraviolet (EUV) lithography technology.
Samsung is considered the largest non-U.S. spender on R&D. Samsung spent ₩21,229.2 billion (equivalent $18.75 billion) in fiscal 2020, which constituted 9% of its sales. The company was also granted 6,415 patents in 2020, placing it at the second spot.
3. United Microelectronics Corporation
United Microelectronics Corporation (UMC) is headquartered in Taiwan with global offices in the U.S., Europe, China, Japan, Korea and Singapore. The company provides high-quality IC fabrication services, focusing on logic and various specialty technologies to serve all major sectors of the electronics industry.
UMC operates 12 fabs that are strategically located throughout Asia with a maximum capacity of more than 750,000, 8-inch equivalent wafers per month. The company reported a revenue of $6.2 billion in 2020. Around 57% of its revenue came from Asia Pacific followed by 30% from North America, and the remaining from Europe and Japan. In terms of revenue, 28 nm technologies and below accounted 14% of it in 2020 while 40 nm business accounted for 23%. UMC leads the industry in RF SOI on 12-inch wafers with 16% global market share.
In April 2021, UMC announced plans to expand capacity at its 300 mm fab 12A Phase 6 in Taiwan’s Tainan Science Park. Total UMC investment is set to reach approximately NT$150 billion over the next three years.
GlobalFoundries holds around 7% market share, similar to UMC. The U.S.-domiciled company was born when Advanced Micro Devices (AMD) spun off its semiconductor manufacturing arm in 2009 with investment from Abu Dhabi-backed ATIC. In 2012, AMD sold its equity stake in GlobalFoundries in a deal that no longer required the company to make its chips exclusively at GlobalFoundries.
In April 2021, GlobalFoundries announced that it will relocate its headquarters to Malta, New York, the site of fab 8 and the company’s most advanced semiconductor manufacturing facility. The company has invested more than $15 billion in its fab 8 facility over the last decade to support innovation and manufacturing capacity. In April 2021, the company said it will double its investment to expand global capacity, with $500 million targeted for Malta alone. In May this year, AMD entered an amended seventh amendment with GlobalFoundries. AMD currently estimates that it will purchase approximately $1.6 billion of wafers from GlobalFoundries from 2022 to 2024 under the A&R Seventh Amendment. In September, Qualcomm and GlobalFoundries announced extension of their successful RF collaboration on 5G multi-Gigabit speed RF front-end products.
5. China’s Semiconductor Manufacturing International Corporation (SMIC)
Headquartered in Shanghai, SMIC is Mainland China's most advanced and largest foundry. The company has an international manufacturing and service base. SMIC Group provides integrated circuit (IC) foundry and technology services on process nodes from 0.35 micron to 14 nm. It has a market share of 4%.
SMIC has made a breakthrough in the 1st generation FinFET technology and entered mass production in the fourth quarter of 2019, which represents the most advanced level of independent R&D of IC manufacturing technology in mainland China. SMIC’s revenue increased by 25.4% from $3.11 billion in 2019 to $3.9 billion in 2020. The revenue from Mainland China and Hong Kong grew to 63.5% of total revenue in 2020, compared to 59.4% of total revenue in 2019. In December 2020, SMIC was added to the list of Chinese military companies by the United States Department of Defense. Broadcom, Qualcomm, and Texas Instruments are some of the company’s customers for its IC manufacturing services on 350 nm to 14 nm process technologies.
Disclaimer: The author has no position in the stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. The data and information are based on company annual reports, earnings reports, and website. Fab is a fabrication facility, a silicon wafer manufacturing plant.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.