Last year, the Asia-Pacific's share of the worldwide foundry industry stood at 78.1 percent and generated revenues of 8.2 billion dollars, a 19.4 jump from the previous year, US-based technology research house Gartner Inc. said.

Led by Taiwan, the epicentre of contract chip production with more than 83 percent of the region's output, Gartner predicted the Asia-Pacific's foundry industry would grow 23 percent this year.

This is expected to generate revenues of at least 10 billion dollars, it said.

"The strong recuperative power of the foundry market has often proved to be remarkable," said Tan Kay-Yang, Gartner's principal analyst for semiconductors.

"Utilization rate in the current quarter is estimated to top 75 percent, with wafer shipments and ASP (average selling price) projected to increase by 26 percent and two percent quarter over quarter respectively," he said.

Despite the rosy projections, the industry still faces downside risks, Gartner said.

"Although geopolitical uncertainty in the Middle East had receded and the Severe Acute Respiratory Syndrome (SARS) pandemic in Asia has improved, downside risks nonetheless still remain," Tan said.

"The overall semiconductor business sentiment continues to appear highly capricious and volatile in the second half," he said.

SPACE.WIRE