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In 2018, foundries face many challenges. How do giants lay out?
In 2018, the IC industry is expected to grow by 7.1%, reaching a market value of $437 billion. Despite challenges in the foundry sector, major players like Intel and TSMC are making significant progress. Intel plans to increase its 10nm production, while TSMC aims to achieve similar success with its 7nm node. GlobalFoundries, Samsung, and TSMC are transitioning from 16nm/14nm to 10nm/7nm nodes, but some companies, like Intel, have faced delays in their 10nm process. Analysts believe that the transition to 10nm/7nm will be complex and costly, with design costs increasing significantly as the technology advances.
While some foundries are focusing on 22nm technology, the demand for this node remains unclear. Meanwhile, the demand for 8-inch wafers continues to be tight, even though the industry isn't as pessimistic as it might seem. According to Joanne Itow from SemicoResearch, the foundry business is expected to grow steadily, with an 8% increase in 2018 compared to 2017.
Growth drivers include artificial intelligence, automotive, and sensors. Even though smartphone sales growth has slowed, the BOM (Bill of Materials) for smartphones still plays a crucial role in the foundry business. Foundries are also seeing opportunities in high-performance computing, power electronics, and cryptocurrencies. The Chinese market is particularly notable, with many foundries expanding or building new fabrication plants.
TSMC continues to dominate the global foundry market, holding a 55.9% share in 2017, followed by GlobalFoundries, UMC, Samsung, SMIC, and others. As Moore’s Law becomes more challenging, the cost and complexity of chip manufacturing are rising, leading to longer development cycles. For example, designing a 7nm chip can cost up to $271 million, compared to just $30 million for a 28nm chip.
Mobile phones remain the largest market for ICs, accounting for 25% of total revenue. However, other sectors like automotive and IoT are growing rapidly. Automotive IC sales are expected to rise by 16%, while IoT-related IC sales are projected to increase by the same amount. These trends highlight the importance of adapting to new technologies and customer needs.
The foundry industry must also navigate economic and political challenges, supply chain issues, and the need for increased R&D investment. Companies like UMC and GlobalFoundries are developing specialized processes such as FD-SOI and high-capacity CMOS to meet diverse market demands. While 22nm technology offers a balance between performance and cost, many customers will continue to rely on 28nm for its reliability and affordability.
The 8-inch wafer shortage persists, with demand remaining strong despite efforts to shift production to 12-inch wafers. This trend is driving innovation in capacity management and process optimization. In addition, the rise of 5G and electric vehicles is creating new opportunities for foundries, especially in power management and RF components.
China's semiconductor market is growing rapidly, with domestic IC design companies gaining traction. Trends like AI, 5G, and IoT are fueling this growth, and the country is investing heavily in emerging technologies. As the industry evolves, foundries must stay agile and innovative to meet the changing demands of their customers.