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Electronics Production | January 21, 2007

Fabless suppliers captured 20%<br>of Worldwide IC Market in 2006

According to data in IC Insights' newly released 2007 edition of The McClean Report, A Complete Analysis and Forecast of the Integrated Circuit Industry, fabless IC suppliers secured 20% of worldwide IC sales in 2006, an increase from just under 10% of the total IC market in 2000.
According to data in IC Insights' newly released 2007 edition of The McClean Report, A Complete Analysis and Forecast of the Integrated Circuit Industry, fabless IC suppliers secured 20% of worldwide IC sales in 2006, an increase from just under 10% of the total IC market in 2000.

Moreover, IC Insights forecasts that, in 2011, fabless IC companies will command at least 25% of the total IC market, especially as large companies like LSI Logic and Agere continue to become fabless, or fab-lite, over the next few years.

Unlike the relatively close annual market growth relationship between fabless IC suppliers and foundries, fabless IC company sales growth versus worldwide IC market growth has typically been very different. According to the new edition of The McClean Report, fabless IC suppliers in total increased their sales by 16% in 2006, 7 points greater than the overall IC market growth rate of 9%. Historically, fabless company IC sales growth rates have been much better, or the declines less severe, than those registered in the overall IC market.

From 1998 through 2006, the worldwide IC market displayed a 9% average annual growth rate. In contrast, total IC sales from the fabless IC companies during this same timeframe increased at almost three times this rate and registered a very strong 25% CAGR. As a result of this trend, fabless IC company sales increased almost 6X from 1998 to 2006 (from $7.3 billion to $42.3 billion) whereas the total IC market increased only 93% in this same timeperiod (from $109.1 billion to $211.0 billion).

Given the big disparity in the 1998-2006 CAGRs between the fabless IC suppliers and the IDMs (integrated device manufacturers), it comes as little surprise that fabless IC companies are quickly increasing their share of the total IC market. Overall, fabless IC suppliers, and the IC foundries that serve them, are becoming a larger force in the total IC industry.

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