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As a result of a 41% increase in the China pure-play foundry market last year, China’s total share of the 2018 pure-play foundry market jumped by five percentage points to 19% as compared to 2017, exceeding the share held by the rest of the Asia-Pacific region. Overall, China was responsible for essentially all of the total pure-play foundry market increase in 2018!
All of the major pure-play foundries registered double-digit sales increases to China last year, but the biggest increase by far came from pure-play foundry giant TSMC. Following a 44% jump in 2017, TSMC’s sales into China surged by another 61% in 2018 to $6.0 billion. The China market was responsible for essentially all of TSMC’s sales increase last year with China’s share of the company’s sales doubling from 9% in 2016 to 18% in 2018.
A great deal of TSMC’s sales surge into China in 2018 was driven by increased demand for custom devices going into the cryptocurrency market. While TSMC enjoyed a great ramp up in sales for its cryptocurrency business through 2Q18, the company encountered a slowdown for this business in the second half of last year, which was apparent in its slower sales to China in 3Q18 and 4Q18. The 2018 plunge in the price of Bitcoins (from over $15K per Bitcoin in January of 2018 to less than $4K in December of 2018) and other cryptocurrencies lowered the demand for these ICs.
With China’s share of the pure-play foundry market quickly growing (going from representing 11% of the total pure-play foundry market in 2015 to a 19% share in 2018) it comes as no surprise that many of the pure-play foundries are planning to locate or expand IC production in Mainland China. Notably, each of the top seven pure-play foundries has plans for increasing China-based wafer fabrication production, including the five non-Chinese foundries of TSMC, GlobalFoundries, UMC, Powerchip, and TowerJazz.
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