Mark LaPedus EE Times (12/01/2009 11:33 AM EST)

SAN JOSE, Calif. -- Contrary to one report, the foundry business is hot, as Taiwan vendors are sold out and leading-edge yields are improving, according to an analyst.

There are other positive signs leading into 2010, including extended lead times for select chips. Lead times for some devices are pushing 20 weeks.

On top of that, PC demand is strong. Inventories remain lean. And consumer products like LCD TVs are seeing new and low price points, which could boost demand.

The foundry business is also strong. ''We believe 12-inch foundry capacity (all nodes) is on allocation through the summer of 2010 and perhaps beyond,'' said Hans Mosesmann, an analyst with Raymond James Equity Research, in a report that concerns his early observations from his Taiwan technology tour.

''Industry sources indicate that TSMC has made a yield breakthrough of 15-20 percentage points in 40-nm yields, an incremental positive for Nvidia. We do believe 40-nm will continue to be tight for months ahead and that Nvidia will likely garner incremental wafer availability,'' he said.

As reported, silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) is still having yield issues with its 40-nm process, according to analysts. But TSMC claims that its 40-nm yields will improve by early 2010.

Mosesmann's view is also slightly different than one from iSuppli Corp., which reported that the foundry business is slowing in the fourth quarter.

In any case, demand remains robust. ''Datapoints throughout the tech supply chain (foundry, substrate, chipset, distributor, notebook ODM, etc.) indicate a bit stronger than seasonal 4Q and likely better than seasonal 1Q,'' Mosesmann said.

''Inventories are lean in the supply chain; however, at OEMs there may be increased inventories of some components as these players wait for longer lead time products to be delivered,'' he said. ''The issue in our view is that bear case for semis is getting pushed out from 1Q to 2Q as lead times for some components are above 20 weeks.''

There are mixed signals in the computer space. ''Notebooks, mainstream, and netbook categories are doing better than expected while Intel's CULV thin and light appears to not to be meeting expectations due to price performance,'' he said.

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