Pivot
Amid the slowdown in global memory semiconductor market growth, major semiconductor companies are strengthening their foundry businesses. In particular, Samsung Electronics and Taiwan Semiconductor Manufacturing Company (TSMC), which have heavily relied on Apple's application processor (AP) business, are now switching their strategy toward mass-customization production in order to lessen their dependence on the U.S. company.
According to market research firm Gartner on Aug. 26, the amount of semiconductors purchased by small and mid-sized firms from foundries in the Chinese market increased from US$7.5 billion in 2007 to US$14.9 billion in 2014. Globally, small and mid-sized firms bought semiconductor chips worth US$78.3 billion last year, comprising 23 percent of the global semiconductor market.
Currently, 165,000 companies around the world are buying chips from foundries. Among them, the amount of semiconductor chips purchased by top 10 companies like Apple, Qualcomm, and Nvidia represents 40 percent of the total.
In fact, the sales of TSMC, the world's largest semiconductor foundry and Apple's largest business partner, come from 90 nm, 80 nm, 65 nm, and 55 nm APs, in addition to 28 nm microprocessors. Semiconductors for consumer electronics, industrial systems, and PCs made up 40 to 50 percent of the company's total sales last year.0
Samsung is also trying to expand the scope of its foundry business, focusing on APs to chips for GPUs, set-top boxes, the Internet of Things (IoT), and radio frequency communications. If its 28 nm FD-SOI process technology that was introduced last May is utilized, the Korean tech giant can diversify its foundry business and reduce costs too.
SK Hynix, which is still preparing for market entry, is also paying attention to other kinds of semiconductors aside from APs. The company has increased the production of 90 nm foundries so far this year, and has decided to change its direction from the mass production of a few products to diversified small-quantity production. If CEO Choi Tae-won's investment drive dovetails with SK Hynix's new strategy, the chipmaker is likely to enter the IoT and automotive semiconductor markets much faster, in addition to existing CMOS image censors and Power Management Integrated Circuit (PMIC) businesses.