Thu, Mar 14, 2002 - Page 17 News List

Tech recovery remains in doubt

PHANTOM DEMAND?Analysts fear higher sales in several technology sectors may just be due to inventory restocking rather than genuine demand from consumers

By Dan Nystedt  /  STAFF REPORTER

A UMC technician.


Mixed signals coming from the market place have left analysts and industry players alike unclear on what sales for high-tech products may look like this year, speakers at Merrill Lynch's fifth Asia Pacific Technology Conference said yesterday.

Although sales are on the rise in many sectors, demand is coming from stores restocking their shelves in anticipation of a rise in consumer demand. The trouble is, consumer demand still hasn't picked up.

Take Samsung Electronics Co, for example. The firm said DRAM computer memory chip prices have risen five-fold since their low last October and prices for panels for TFT-LCD screens have also strengthened.

The only problem is, "currently, demand is being driven by an inventory adjustment," according to Chu Woo-sik, vice president at Samsung Electronics.

"We are uncertain about the second quarter," he added. Not only is much of current demand driven by retailers and wholesalers rebuilding their inventory, Chu said the market "might be in a little over-supply" already.

Rising DRAM memory and TFT-LCD panel prices may also be acting as a drag on the computer sector. Chu said some computer retailers are beginning to put less DRAM in each computer sold due to the rising price.

When DRAM prices bottomed at around US$1 per chip in the fourth quarter last year, computer sellers put more inside each system to improve its performance. Now, DRAM chip prices have risen to US$5 per chip, and stores are more reluctant to add additional memory for each computer.

TFT-LCD panel prices are also on the rise, but the Samsung vice president said sales of flat-panel displays have not yet been affected by rising prices.

The chips are up at TSMC, UMC

Taiwan Semiconductor Manufac-turing Co and rival United Micro-electronics Corp say their factories will operate at about two-thirds of capacity by the second quarter.

TSMC said factory use in the first quarter will exceed its earlier expectation of 60 percent, while UMC said its facilities will probably run at 70 percent of capacity by the second quarter.

TSMC may also boost spending this year from the US$1.65 billion originally targeted in January, while UMC said it will maintain its expansion budget at US$800 million.

Taiwan's foundry chipmakers said demand is continuing to rise for a range of products, not only in semiconductors for computers, but also communications and products like DVD players.

Harvey Chang (張孝威), finance director at Taiwan Semiconductor Manufacturing Co (台積電), said TSMC is planning to adjust its spending on new plants and equipment in order to keep up with growing demand.

The firm expects sales to rise 5 percent to 10 percent in the first quarter over the fourth quarter last year.

United Microelectronics Corp (聯電), the world's second largest foundry chipmaker after TSMC, also said its sales are increasing, especially in state-of-the-art manufacturing processes, etching transistors into silicon at tiny 0.18 microns and below.

Orders for these high-margin manufacturing services accounted for 19 percent of all of UMC's orders last year, up from 13 percent the year before.

"We have seen this pick up in demand," UMC Vice Chairman Peter Chang (張崇德) said. On a more ominous note, however, Chang said that "today's situation will be better than [the second quarter]."

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