IC Insights: “Tower-Jazz’s Sales forecast to surge in 2016”

31 August, 2016

Israeli Tower-Jazz will become the world’s 5th largest pure-play chip foundry thanks to a yearly 35% compound annual growth since 2013. In 2016, the company will is forecasted to display the highest growth rate amongst chip producers

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Israeli Tower-Jazz will become the world’s 5th largest pure-play chip foundry thanks to a yearly 35% compound annual growth since 2013. In 2016, the company will is forecasted to display the highest growth rate amongst chip producers

Tower-Jazz's Migdal Haemek plant
Tower-Jazz’s Migdal Haemek plant

The pure-play foundries market is growing at a faster pace than the global semiconductor market as a whole. This is one of the insights from IC Insight’s report ranking the 10 leading foundries. The pure-play market has grown by 17% sin 2014’ compared to a 9% of the global semiconductor market.  In 2015 the numbers were less impressive, but still – the pure-play foundry market showed a 6% increase, about one-third the rate of growth in the previous year, but seven points higher than the total IC market growth rate of -1%.

The Data collected in 2-16 shows that the foundries market is much more centralized than the already centralized semiconductor market. The ten leading pure-play foundries hold 95% of the market, while the first four players – SMIC, TSMC, GlobalFoundries and UMC control a staggering 84% of the pure-play market. But even these figure are not telling the whole picture – TSMC, the world leading pure-play foundry controls 58% of the global market, thanks to an impressive leap from $1.5 billion revenues in 2015 to $2.1 in 2016.

The three remaining giants are expected to hold their power – 25% of global market. In this state of affairs, what chances does an Israeli producer have? According to IC Insights, the chances are great. “The two top-10 pure-play foundry companies that are forecast to display the highest growth rates this year are Israel-based TowerJazz, which is expected to edge-out Powerchip for the 5th spot in the pure-play foundry ranking in 2016, and China-based SMIC, with 30% and 27% sales increases, respectively. “TOWERJAZZ-2

The research company expects TowerJazz to grow from $505 million in sales in 2013 to $1,245 million in 2016, a compound growth rate of 35%, while SMIC is forecast to more than double its revenue from 2011 ($1,220 million) to 2016 ($2,850 million) and register a 19% CAGR over this five-year time period. Tower-Jazz is exceptional in another aspect – together with American GlobalFoundries, the company is one of two non-Asian companies in the prestigious list.

Sleeping dragons

For the time being, the Chinese dragon has not overtaken the field of pure-play foundries, Chinese foundries are forecasted to control a mere 8.2% of global markets, a 5.1% decrease compared to 2007, when companies from the People’s Republic held 13.3% of the market. According to IC Insights, this is only a temporary absence. The research institute believes that the total Chinese company share of the pure-play foundry market will increase through 2020, as the China-based foundries take advantage of the huge amount of government and private investment that will be flowing into the Chinese semiconductor market infrastructure over the next five years.

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