Despite projections that 40nm pure-play IC foundry will represent 60% of total pure-play foundry sales in 2016, the market for pure-play foundry supplied wafers at 40nm and larger nodes is going to be flat this year, according to IC Insights.

In contrast, the leading-edge, less-than-40nm pure-play foundry market in 2016 is expected to surge by 23%, increasing by a hefty $3.6 billion, according to the market research firm.

ICInsights pureplay Fig01 Figure 1: Pure-play foundry market by leading and trailing parts (Source: IC Insights)

TSMC has long been the technology leader among the major pure-play foundries. As shown in Figure 2, 54% of TSMC’s 2016 revenue is expected to come from lower than 40nm processing. GlobalFoundries, which has dedicated a large portion of its capacity to making advanced processors over the past few years, also generates a large portion of its sales based on leading-edge process technology and feature sizes. In 2016, 52% of GlobalFoundries’ sales are forecast to come from lower than 40nm production.

ICInsights pureplay Fig02 Figure 2: Pure-play foundry sales by feature size (Source: IC Insights)

Although GlobalFoundries and TSMC are forecast to have a similar share of their sales dedicated to lower than 40nm technology this year, TSMC is expected to have almost six times the sales volume at lower than 40nm as compared to GlobalFoundries in 2016—$15.6 billion for TSMC and $2.6 billion for GlobalFoundries. In contrast, SMIC only entered initial production of its 28nm technology in the fourth quarter of 2015, more than three years after TSMC first put its 28nm process into production.

Because TSMC has a very large percentage of its sales targeting lower than 40nm production, its revenue per wafer is forecast to increase at a CAGR of 3% from 2011 through 2016 as compared to a -1% CAGR expected for the total revenue per wafer average of GlobalFoundries, UMC, and SMIC over this same time period.

Only 2% of SMIC’s 2016 sales are expected to come from devices having 28nm feature sizes (the company does not offer a finer feature size at this time), which is the primary reason its revenue per wafer is so low as compared to TSMC and GlobalFoundries.