The number of semiconductor factories capable of producing high-end equipment in the 22nm to 20nm range will fall to three by the end of 2011, according to the latest report from iSuppli.
The research firm said that just three big hitters will survive the year, namely Taiwan Semiconductor, GlobalFoundries and Samsung Electronics, which recently announced a tie up with IBM.
Other companies will be able to serve the remaining markets, according to iSuppli, which added that United Microelectronics and Semiconductor Manufacturing International, for example, will be in a position to produce 32nm and 28nm nodes in high volume.
"The enormous cost of advanced semiconductor process technology is whittling down the ranks of leading-edge foundries, with just three firms likely to remain at the end of the year," said Len Jelinek, director and chief analyst for semiconductor manufacturing at iSuppli.
"Unless additional foundries join the party, semiconductor companies will face minimal competitive choices when it comes to advanced chip geometries."
Changes to the market could force some vendors into decisions about their own organisation and manufacturing systems, according to the report, and Intel was singled out as one manufacturer that could benefit.
Intel could offer its own foundry services to design companies and suppliers that want to use the Atom processor, for example, but this would be a dramatic change even though it could lead to significant revenue gains.
Such a move could allow Intel, Samsung and GlobalFoundries to challenge Taiwan Semiconductor, which enjoys a 50 per cent market share in the foundry business and has leading technology and huge manufacturing capacity.
Japanese companies are likely to suffer the most, iSuppli warned, with no sup pliers left in the country working on chips 32nm and below by the end of 2011.
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