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Press Releases
Global Top Ten Foundries for 2Q19 Perform Less-than-expected Due to Sliding Demand and High Inventories, Says TrendForce



According to  TrendForce’s  latest statistics, the weakened demand in 1Q persisted well into 2Q as a result of political and economic instability Suppliers' revenues generally exhibited a dropping trend YoY, and 2Q total revenue for foundries worldwide is expected to drop by about 8% compared to the same period 2018, arriving at US$154 billion The top three in market shares are TSMC, Samsung and GlobalFoundries TrendForce points out that the top 5 in 2Q19 foundry rankings remained identical with that of last year, while sixth place to tenth place showed some changes, including a PSC falling from seventh to ninth in a year due to declining foundry demand for memory and display driver chips; and a VIS being surpassed by H-Grace and falling down to eighth place in revenue, due to its lack of 12-inch production capacity in a world increasingly moving towards 12-inch production for display drive chips  Looking at 2Q performance of the top ten foundries, only Hua Hong Semiconductor benefitted from a rather stable demand in markets such as Smart Cards, IoT, Automotive MCUs and power components, with revenues trending flat compared to last year The remaining businesses were stuck with a weak demand and yet-to-be-consumed inventories This, among other reasons, caused total revenue performance in 2Q to suffer a revenue decline YoY of around 8% TSMC, being the company to take nearly half in market shares, deserves the most attention as it suffered a comparatively small setback in 2Q thanks to a heightened demand for advanced processes, mainly consisting of 7nm processes The US Department of Commerce also placed Huawei and 70 of its subsidiaries on the Entity List on May 17 This motion caused leading US suppliers such as Qualcomm, Qorvo, Google and ARM to distance themselves from Huawei, leading to an unprecedented sales dilemma for Huawei and further impacting 2H19 performance of foundry businesses worldwide, including TSMC Furthermore, Google's announcement to discontinue related software and services for Huawei in accordance with the demands of the policies in place may also disrupt Huawei's international sales, undoubtedly forming a major hit to a Huawei with overseas markets comprising over 40% of smartphone sales Contrarily, Huawei's main competitor overseas, Samsung, has a complete network of distribution channels all over the globe, and potentially has the most to gain from this changing global landscape Judging from the smartphone and processor supply chains, Samsung's adoption of its own Exynos processors on its flagship phones will impact TSMC's 7nm processes the most If Samsung takes over Huawei's share of the European market, TSMC will find it difficult to retake market shares previously belonging to its flagship processors through customers such as Qualcomm and Mediatek A glance at 2019 shows a worldwide economy majorly impacted by the tariff disputes between the US government and China, India and Mexico, as well as the conflicts in the Middle East The World Bank has already cut its global GDP prediction down from 29% forecast in January to 26%, while IMF adjusted its own predictions down from 36% to 31% TrendForce's projections are that the worldwide foundry industry 2019 will exhibit negative growth for the first time in a decade, with total revenue falling by nearly 3% compared to 2018

Press Releases
Global Top Ten IC Foundries Ranked for 1Q19, with TSMC Expected to Reach 48.1% Market Share, Says TrendForce



According to TrendForce's newest research report, development momentum of advanced production processes has been dropping due to weakening demand in most end markets, including smartphones Foundries face a severe challenge in 1Q19, and global foundry production revenue for the first quarter is expected to decline by around 16% compared to the same quarter 2018, arriving at 146 billion USD TSMC, Samsung and GlobalFoundries take first, second and third place respectively in market shares, and although TSMC's market share reaches 481% , it suffers a near 18% decline in YoY growth TrendForce points out that the 1Q19 rankings for foundries remains almost the same as last year's save for Powerchip, who might be surpassed by TowerJazz due to falling demand in the 12-inch foundry market  However, upon closer examination of the top ten foundries (including TSMC, Samsung LSI, GlobalFoundries, UMC, SMIC, Powerchip etc), they all exhibited double-digit downslides in revenue performance compared to the same quarter last year This is also due to the weakening demand in the 12-inch foundry market In contrast, though companies who have 8-inch foundries as their main focus, such as TowerJazz, Vanguard, Hua Hong, Dongbu HiTek etc, did not show an outstanding YoY revenue performance comparable to the same period last year due to the gradual alleviation of the shortage situation, these 8-inch focused foundries still managed to hold their ground in a relatively gloomy semiconductor market of the first season compared to the double digit decline suffered by their 12-inch counterparts Although market share champion TSMC scrapped wafers due to the defective photoresist chemical incident in the first quarter, and was affected by the lower-than-expected sales performance among its major smartphone customer base and the subsided cryptocurrency gold rush, it still sits snugly atop the throne in foundry market shares Looking forward, TSMC's 2019 market performance will be aided not only by the first quarter shipment orders pushed to the second, but also by contributions to revenue from collaboration with customers such as HiSilicon, Qualcomm, Apple and AMD etc We may get a chance to see TSMC's revenue climb its way out of the 1Q19 valley season by season Samsung Foundry, which split off back in 1H17, landed second place in market shares thanks to contributions from its System LSI division Yet according to our estimations, their revenue from external customers contribute to only about 40% of its revenue Samsung has also been promoting multi-project wafer (MPW) services in recent years Apart from the active acquisition of advanced manufacturing services, their 8-inch production line located in Giheung, Korea will gradually contribute to Samsung Foundry's revenue as well Samsung aims to secure a 25 % market share by 2023 The global foundry production capacity will near the 70 billion USD threshold in 2019 looking forward However various nuisances have impacted the 1Q19 market: Apart from the traditional offseason, weakening demand for consumer products, rather high inventory levels, falling demand in the car market, the Intel CPU shortage and the slowing of China's economic growth, the US-China trade dispute also presents major uncertainties for the global market If the politico-economic situation doesn't see significant improvement in the first half of the year, we at TrendForce will maintain a cautious view on the global foundry industry of 2019 We won't even rule out the possibility of rare negative numbers in total production capacity growth

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