The global foundry market will show its strongest growth in six years in 2020 thanks to demand for 5G mobile chips, according to research firm IC Insights.
The pure foundry market will grow by 19% year over year this year to US$66.7 billion, the firm said.
In 2014 the market grew by 18% year over year. Last year it contracted 1%.
Pure foundry refers to companies that produce their own chips such as TSMC and UMC of Taiwan as well as GlobalFounderies of the US and SMIC of China.
Samsung and Intel also have foundry businesses but they also produce their own chips, which makes them integrated device makers.
Increased demand for application processors for 5G smartphones and high-performance computing allowed for pure foundries to show strong growth, IC Insights said. 200 million 5G smartphones will be shipped this year, the firm said.
Samsung and Huawei are leading the way and Sony and Apple are join the 5G bandwagon soon.
Mobile application processors and computing processors require under 7-nm chip processes. TSMC and Samsung are the only ones offering 7-nm processes and this has resulted in supply problem.
US sanction against Huawei is expected to exasperate this supply problem. Qualcomm is using SMIC foundry and this order will now likely placed to a different vendor. The US chip giant was in talks with Taiwanese foundries TSMC, UMC and VIS to shift it orders to these companies.
The pure foundry market will grow at an average rate of 9.8% per year from 2019 to 2024, IC Insights said.