Tue, Mar 23, 2004 - Page 11 News List

Forecast for chip industry is strong, despite tensions


Growth in the nation's chip industry is expected to accelerate this year, helped by increases in corporate spending and ongoing strong demand for consumer electronics, industry researchers said yesterday.

The production value of the chip industry is expected to jump by 42 percent to NT$1.16 trillion from NT$818.8 billion last year and will continue to add another 12.5 percent next year, according to the Industrial Technology Research Institute (ITRI, 工研院), a government-funded research body.

"The thriving demand is stemming from strong demand in digital consumer electronics such as DVD players, digital televisions and mobile phones as the dream of a digital home is gradually realized,"said Eric Jain (簡志勝), an analyst at ITRI, during a three-day industrial seminar in Taipei.

"The improving economy has given a reason for consumers and enterprises to spend," said Wang Bou-li (王博立), a semiconductor analyst at Polaris Securities Group (寶來證券).

The global economy is projected to grow 4.2 percent this year, which is expected to boost corporate spending by 5.3 percent and corporate information technology spending by 5.3 percent on last year's figures, according to statistics provided by ITRI.

First-quarter sales of semiconductor testers and packagers are likely to report five- to 10-percent growth quarter-on-quarter, bucking the conventional trend of a 5- to 10-percent decline, Wang said.

"This growth has rarely been seen before," he said.

The upbeat assessment came despite the TAIEX falling heavily yesterday due to lingering political turmoil after Chinese Nationalist Party (KMT) Chairman Lien Chan (連戰) and his supporters took to the streets calling for a recount of ballots.

But Wang said "the sooner the rally ends, the less the impact it will have on the nation's industries."

Wang Chang-ying (王嫦瑛), acting director of the Electronic Industry Intelligence Division at ITRI, expected the political dispute to wield only a short-term impact.

"Company executives will certainly be concerned about the situation, but I believe it won't be a long-term issue," he said.

"Taiwan's chip industry will grow along the global industry's upswing," he said.

Taiwan Ratings yesterday also said the political disorder and the TAIEX's plunge would not downgrade current ratings for local corporations.

"Taiwan Ratings believes political turmoil and stock-price fluctuations will not affect the companies' fundamentals," the rating agency said in a statement released yesterday.

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