Big push made by Korean foundries

Korean chipmakers are likely to emerge as a formidable force in the non-memory chip business, following in the memory semiconductor sector, as more local firms are boosting their presence in the semiconductor foundry business, where Taiwanese chipmakers have been leading the pack, with new investment and facility expansion.

Currently, the portion that Korea¡¯s vendors take up of the world¡¯s foundry market remains at mere 5.4%, a negligible figure compared to 79.3% of that of Taiwanese and 14.0% of Singaporean firms. However, local firms set out with massive investment and such big markets as the U.S. and Japan are tilting to diversify their import lines into Korea. This drives Taiwanese chipmakers to pay all their attention to Korean makers¡¯ every movement.

On the front of memory chips, which are used in computers and telecom equipment, Korean electronic makers have held the top position in the global market. On the other hand, they are suffering from tiny share in the world¡¯s non-memory chip market, which is four times bigger than that of memory chips.

Attach of Korean foundries: Dongbu Electronics has advanced into the foundry business by signing contract with Toshiba of Japan July 3. According to the agreement, the Japanese electronics giant is to transfer its CMOS logic processing technology to Dongbu and invest US$50 million in the Korean firm¡¯s foundry facilities, which are planned to churn out far-reaching non-memory foundry products starting next year.

Anam Semiconductor, which has been processing 21,000 8-inch wafers a month since 1996, plans to increase its output to 30,000 wafers a month by this year¡¯s end through purchasing new equipment amounting to US$150 million for its Puchon production line.

Last month, Hyundai Electronics Industries also announced its ambitious vision that this year would be a momentum for its non-memory business, and it would pour US$200 billion by next year to rank it the third largest foundry in the world.

Challenge against Taiwan: A series of earthquakes that did terrible damage to Taiwanese chipmakers, on the other hand, have provided a good chance to Korean firms. Ever-improving technological edge of Korean firms is another reason that the country-made non-memory chips get more popularity in the world market. It is also a good news to local firms that the U.S. and Japan are diversifying their import lines, as a counter movement against Taiwan¡¯s near monopolistic market share.

Under the circumstances, local semiconductor industries are expecting that the non-memory chip foundry will become a new power engine to lead the nation¡¯s economic growth in the 21st century.

Explosive growth of foundry market: Semico Research, a market survey institution, said July 11 that severe shortage in semiconductor foundry supply is anticipated. IDC also projected that the world¡¯s foundry market will see an annual average growth of over 40% for the next five years. Following US$6.8 billion registered in last year, the world¡¯s foundry market volume was estimated to reach US$10.5 billion for this year, US$25.3 billion for 2002 and over US$36.2 billion for 2004, according to IDC. Non-memory semiconductor market including foundries, which accounts for 79% of the total global chip market with US$122 billion, is four times bigger than that of memory semiconductor (US$32.7 billion or 21%).

Recent movements of Taiwanese foundries: Taiwan Semiconductor Manufacturing Co. (TSMC), the country¡¯s biggest chipmaker, recently took over WSMC, the third largest in Taiwan, and TSMC-Acer at US$7.5 billion. Along with the merger, TSMC is planning to increase this year¡¯s non-memory semiconductor (equivalent silicon wafer) production by 90% from a year earlier. TSMC and United Microelectronics Corp. (UMC), the country¡¯s second largest chipmaker, has been competitively expanding their facilities, with investment of US$3 billion and 1.92 billion, respectively, for this year.