Fabless sector underperforms
Whisper it not in Gath nor tell it on the streets of Askelon – but the chickens may be coming home to roost for fab-lite with the fabless sector growing less than the overall semiconductor industry for the first time in the industry’s history.
According to Arizona analysts IC Insights, the fabless sector grew 27% last year while the overall semiconductor industry grew 31%.
Were the fabless sector’s IC designs any less innovative last year? Were its sales people less diligent? Or was its relatively poor performance due to the fact that manufacturing capacity last year was the tightest it has ever been?
One inclines to think the latter. While foundry wafers were cheap and plentiful, fab-lite made sense. When access to foundries is problematic and prices go up, as they did last year, then the fab-lite companies are just that – light on fab, short on wafers and lacking in sales.
Having said that, there was a Magnificent Seven in the fabless community which grew faster than the market last year:
Company Growth 2009-10 %
1 Mstar 605 - 1,067 76%
2 Altera 1,196 - 1,954 63%
3 Broadcom 4,271 - 6,589 54%
4 Novatek 819 - 1,149 40%
5 Avago 858 - 1,187 38%
6 Xilinx 1,699 - 2,311 36%
7 Marvell 2,690 - 3,592 34%
The Magnificent Seven represented a 47% increase in IC sales last year, and accounted for 45% of the total increase in fabless IC sales in 2010 ($5.7 billion out of $12.6 bn.
On the other hand there were the Seven Duffers who, in total only increased their sales by 8% – Qualcomm, MediaTek, Nvidia, LSI, ST-Ericsson, Realtek, and Himax.
You have to ask: Was the under-performance of the fabless sector in 2010 a function of wafer capacity constraints?
Is in-house manufacturing looking a bit more attractive?