IC Insights: China's Mainland Foundries to Account for 8.5% of Global Market Share in 2021

On March 8, IC Insights, a world-renowned semiconductor analysis organization, updated the "2022 McLean Report", which updated the changes in the global pure wafer foundry market share by 2026.

The report shows that after a 2% decline in 2019, the global foundry market rebounded strongly by 21% in 2020, driven by sales of 5G smartphone application processors and other telecommunications equipment. The market continued to grow in 2021, increasing by 26%. If IC Insights's forecast of a 20% increase in the global foundry market this year is realized, the period from 2020 to 2022 will be the strongest three-year growth span for the entire foundry market since 2002-2004 (as shown below).

Prior to 2019, the last time the foundry market declined was in 2009 (down 11%). IC Insights does not expect the pure-play foundry market to decline again in the next five years. In the past 18 years (2004-2021), the pure-play foundry market grew by 9% or less in nine of them and by double digits in the other nine years (40% in 2004, 20% in 2006, 43% in 2010, 16% in 2012, 14% in 2013, 13% in 2014, 11% in 2016, 21% in 2020, and 26% in 2021). Nine of the top 12 foundries in 2021 are located in the Asia-Pacific region. Europe-based specialty foundry X-Fab, Israel-based Tower (now expected to be acquired by Intel), and U.S.-based GlobalFoundries were the only non-Asia-Pacific companies in the top 12 last year.

In 2020, SMIC achieved a 25% sales growth, but China's mainland China's share of the entire pure foundry market fell to 7.6% (as shown in the figure below). 

In 2021, SMIC's sales grew 39%, while the entire global foundry market grew 26%. In addition, Huahong Group's sales growth rate last year was twice that of the entire foundry market (52% for Huahong Group and 26% for the entire foundry market). As a result, mainland China's share of the pure-play foundry market increased by 0.9 percentage points to 8.5% in 2021.

IC Insights believes that by 2026, China's total share of the pure foundry market will remain relatively stable. Although China's foundries plan to use public and private capital investment to increase semiconductor market infrastructure in the next five years (SMIC's capital expenditure increased significantly in 2020), China still lacks some competitiveness in the high-end foundry field. It is expected that by 2026, China's foundries will account for 8.8% of the pure foundry market, 2.6 percentage points lower than the peak share of 11.4% in 2006.