Global spending on equipment used in the manufacture of semiconductors is expected to remain strong next year, despite several local chipmakers' decision to put capacity expansion plans on hold after weathering the inventory corrosion phase, a supplier said yesterday.
"Some semiconductor manu-facturers are turning cautious about capacity buildup, and they are taking precautions to avert oversupply," said Erix Yu (余定陸), a vice president of Applied Materials Inc's Taiwan affiliate.
"But that is not an industry-wide phenomenon. At least, we haven't seen any request from our customers to push back their equipment delivery schedule, or postpone orders," Yu said.
Despite concerns over excess chip inventory, semiconductor-equipment expenditures are likely to remain unchanged next year, he said.
Semiconductor manufacturers worldwide are expected to spend US$36.16 billion on new facilities this year, up from US$22.19 billion last year, according to a forecast made by Semiconductor Equipment and Materials International in July.
Inventory in the supply chain climbed to a 9-quarter high of 65 days in the quarter to June, but Yu said that still fell in an acceptable range, compared with over 80 days during the previous period of semiconductor oversupply in 2000.
"Of course, we'll closely monitor how much Christmas demand will help digest the inventory, but we're not too worried," Yu said, adding that his company still expected the industry to regain momentum after the inventory correction has been completed.
The Santa Clara-based company supplies semiconductor equipment to numerous industry leaders, including the world's largest two contract chipmakers, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電).
"Clearly the industry slowed down in August, but we believe this is a correction period rather than the beginning of a downturn," research house VLSI Research Inc said in its latest report.
The book-to-bill ratio of global semiconductor equipment suppliers dropped below parity level to 0.94 last month, a figure which has not been seen since last August, VLSI said on Friday.
Still, concern over a glut intensified as fresh worries surfaced that prolonged inventory problems could drag down chipmakers' factory utilization and cause further scale-backs in new equipment outlay, analysts said yesterday.
"There's slim likelihood that the global semiconductor companies will increase spending on new facilities when the industry is heading to its next downturn," said Charlie Chen (陳思旭), a semiconductor analyst with Grand Cathay Securities Co (大華證券).
Chen said that TSMC's and UMC's factory utilization could drop to 90 percent in the final quarter, from 100 percent over the past few quarters.
TSMC could maintain its pace by boosting capacity and may keep capital spending unchanged at the company's initial estimate of US$2.4 billion, but smaller rival UMC will certainly trim expenditures to avoid a drop in its utilization rate, Chen said.
UMC almost tripled its capital expenditures this year to US$2.2 billion from US$740 million last year.
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li