Research and Markets (R&M) has announced its "Global Wafer Foundry Industry Report, 2006." Based upon extensive research, this report surveys the world's top wafer foundry fabs covering technical analysis, production capacity, as well as sales status and market strategies.

The report divides the wafer foundry industry into three sectors. The first has a single member, Taiwan Semiconductor Manufacturing Company Ltd.(TSMC), which according to R&M is known for excellence in production. This explains why it is usually the first choice for many large IC design houses. Whenever the semiconductor industry suffers a recession or a decline in demand, large-sized IC design houses tend to order from TSMC. Therefore, the more recessionary the semiconductor industry, the more orders TSMC receives and accordingly the fewer other wafer foundry fab obtain.

According to R&M, the second sector includes United Microelectronics Company (UMC), Semiconductor Manufacturing International Corporation (SMIC), Chartered and IBM. These four wafer foundries are usually the second choice, or alternative, for large IC design houses and the first choice for medium IC design houses. When a downturn occurs in the semiconductor industry, these four companies are apt to feel the impact first. Relying on the local industry chain, manufacturers in the third camp each have their own specialties and regional advantages.

The development of the wafer foundry industry on the China mainland is greatly hindered by IC design houses on the China Mainland. Among those 500 IC design houses, at most only 50 are able to mass produce. Considering those 50 design houses are engaged in mass production, more than 90% of them focus on logic rather than analog ICs. For logical IC, wafer size and manufacturing techniques determine the production cost. Twelve-inch and 90 nm or 65 nm wafer are the lowest-cost solutions for logical IC. According to R&M, in the logic IC sector, wafer foundry fabs on the China mainland are not particularly competitive, with the exception of SMIC. Today, 45 out of 57 wafer fabs in China mainland are still manufacturing products over 0.5 nm.

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