A slew of healthy third-quarter results in Taiwan's semiconductor industry last week and bullish forecasts from senior officials at those companies are indicators that the local chip industry is finally recovering from a three-year slump.
"A recovery is already underway," said Alfred Ying (
The world's two largest manufacturers of made-to-order semiconductors reported soaring profits last week. On Tuesday, industry leader Taiwan Semiconductor Manufacturing Co (TSMC,
TSMC chairman Morris Chang (
Most forecasts -- including those from US-based researchers International Data Corp (IDC) and Gartner Inc -- still lag Chang's and call for around 10 percent growth in the semiconductor industry next year.
Taiwan leads the world in manufacturing semiconductors for global corporations on a contract, or original equipment manufacturing (OEM), basis. Healthy order books here mean global technology companies are bullish on higher sales of their products.
"What is probably more important is that it seems like business confidence is recovering," Chris Hsieh (
Smaller chip companies have also seen healthy rises. Mediatek Inc (
Computer hardware companies here are also smiling. Last week Acer Inc, BenQ Corp (
But experience has taught industry watchers not to be overoptimistic about good results. A small peak last spring led to a frenzy of buying that petered out in the second half of the year. While the industry managed to grow around 1 percent from a drop of more than 30 percent in 2001, the result fell well short of the double-digit growth of the 1990s.
"TSMC is the first to come back to 2000 levels, but this does not necessarily mean that the whole industry has come back," said Abraham Lu (
With the US economy growing 7.2 percent last quarter, the strongest quarterly growth since 1984, there may be more good news to come. Information technology (IT) productivity and GDP growth are very closely linked, IDC analyst and vice president Vernon Turner said last week, and many corporations have not upgraded their computer equipment since the Y2K bug spending spree of 1999.
In the summer, IDC predicted IT spending would grow 4 percent annually over the next four years. Gartner also recently called for a "big turn" in IT spending next year, jumping from less than 3 percent growth this year to 5.4 percent next, and then 5 percent each year until 2007.
"A substantial recovery in information technology capital spending is increasingly likely in 2004," Michael Fleisher, Gartner chairman and chief executive officer, said on Oct. 20.
With a recovery in PC spending, the semiconductor industry could finally be looking at sustained growth in all areas.
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