Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, celebrated 20 years in business on Monday with a new growth forecast for the global chip industry.

Chip industry revenue overall will grow by 5 percent to 10 percent per year over the next decade, and the contract chip manufacturing sector will continue to outpace the industry average, said Morris Chang, chairman and founder of TSMC, speaking at a conference in Taipei.

Last year, global industry revenue increased 8.9 percent over 2005 to a record high $247.7 billion, according to the Semiconductor Industry Association (SIA), a global trade group.

It's a bold prediction for what appears to be a maturing company, with $9.7 billion in sales last year and tough competition. The fastest phase of TSMC's growth came in the first decade and a half of its life, peaking about the same time as the dot-com bubble, and market leaders almost always lose market share to competitors as their industry expands.

TSMC manufactures chips that are designed by other companies, a business model it pioneered. Prior to the Taiwanese company's founding, small chip design firms had to ask Intel and other big chip makers to make their chips, and these companies would only comply if their factories weren't already full. The smaller companies had no choice. Setting up their own chip factory would have cost around $1 billion each, a huge hurdle for a new company. Today, such plants cost $3.5 billion.

Chang founded TSMC to take over the manufacturing side of the business, giving small chip designers a chance by ensuring they had reliable production and didn't have to pay the hefty price tag of a new chip factory just to get into the business. The result has been steady growth for the foundry industry and the chip design companies they service.

Last year, the chip design industry accounted for 20 percent of global chip revenue, or $49.7 billion, according to the Fabless Semiconductor Association. Mobile phone chip developer Qualcomm and graphics chip designer Nvidia are two examples of chip designers that have been wildly successful, despite not owning their own factories.

The success of the chip foundry model has given rise to a number of new competitors, including heavyweights IBM and Samsung Semiconductor on the top end, and several Chinese rivals, including Semiconductor Manufacturing International Corp. (SMIC), on lower end chips. These new rivals have been able to survive, and in some cases thrive.

But even as the number of rivals in the contract chip industry grows, TSMC appears to be maintaining its edge.

TSMC took a 45.2 percent share of revenue in the foundry market last year, according to Gartner. Revenue for the entire foundry industry was $21.5 billion, or nearly a quarter of total chip industry revenue, the market researcher said.

The company's nearest rival is United Microelectronics Corp. (UMC), which saw its market share drop below 15 percent last year, mainly at TSMC's expense.

One troubling trend for TSMC is market share gains made by Chartered Semiconductor Manufacturing. The Singaporean chip maker has benefitted from a technology alliance with IBM, which also includes Samsung Electronics, Advanced Micro Devices, and others. Chartered has won orders for AMD microprocessors through the alliance, giving it fuel to expand research and development for more advanced chip manufacturing techniques.