Chip foundries for the chop, says iSuppli

The number of chip foundries worldwide is likely to be reduced to just three, according to iSuppli.

The analyst outfit claims that while the global semiconductor foundry market is set grow in 2010, the recent downturn is likely to thin the ranks of suppliers down to just three. iSuppli said that global Foundry revenues are set to rise to $21.6 billion in 2010 which is an increase of 21 percent on 2009 – a year that pure play foundries are unlikely to look back on fondly.

However, it looks as if next year is likely to bring a new set of problems for the industry. “Tough competition will remove some of the players in the market,” says the iSuppli report.

This and the cost of developing and implementing next-generation processes for a variety of technologies is rising. The only way outperform the market is to stay at the cutting edge of semiconductor process development, the report warned.

Some foundries have managed to survive by switching to low-cost manufacturing, trailing behind the process migrations of the most advanced players. But this is not working in a slower market and these companies will end up going to the wall, iSuppli said.