TSMC may cut spending on equipment next year

Taiwan Semiconductor Man-ufacturing Corp (TSMC, 台積電), the world's largest supplier of made-to-order chips, said it may cut spending by as much as half next year because of slower sales growth in the semiconductor industry.

The company may invest between US$1 billion and US$2 billion next year, its spokesman Tzeng Jin-hao (曾晉皓) said. TSMC estimated its spending at about US$2 billion this year.

Global sales growth of semiconductors used in PCs and mobile phones may peak this year, said IDC, a market researcher, last week. IDC forecast 18 percent growth in PC chip sales this year and 7.8 percent annual growth on average in the next four years. Some investors were more optimistic, saying TSMC will benefit from growth in semiconductor demand in the next few years.

"The industry won't decline until it's 2006," said James Johnstone, who helps manage the equivalent of US$90 billion globally for Gartmore Investment Management in London and said he plans to increase his stake in TSMC.

The company's earnings may beat those at smaller rivals because the chipmaker offers customers including Texas Instruments Inc and Qualcomm Inc the most advanced chip-making technology in the world, Johnstone said.

The company may post earnings per share this year of as much as NT$4, compared with NT$2.33 last year, he said.

TSMC said industry sales growth may fall to 10 percent by next year from 26 percent this year.

Shares of Semiconductor Manufacturing International Corp (中芯國際集成電路), which was China's first chipmaker to sell shares publicly, have fallen 14 percent in the two days that they've traded.

The stock declined on concern an industry slowdown will erode profit for the three-year-old company.

Semiconductor Manufacturing was started by chief executive Richard Chang (張汝京) after TSMC bought a rival company he started in Taiwan.