Mon, Nov 15, 2004 - Page 10 News List

Tech investment might drop 10%

PREDICTIONS Analysts says the semiconductor and flat-panel display industries are unlikely to grow, especially if rising oil prices restrict world economic growth

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Technology investments in Tai-wan, the world's third-biggest producer of semiconductors, may fall more than 10 percent next year because of slowing demand for flat panel displays and memory chips, fund managers said.

That will exceed the 7 percent, NT$500 billion (US$15 billion) drop reported on Saturday by a Chinese-language newspaper, which cited an unidentified economics ministry official.

The forecast reported by the newspaper is "too optimistic," said HSBC Asset Management Taiwan's chief investment officer Winnie Tiao (刁明華).

"The semiconductor industry has peaked this year and the flat- panel display industry is also unlikely to grow," Tiao said in Taipei.

Higher oil prices may cause the world's economic growth to slow next year, reducing demand for electronic components, the mainstay of the economy.

Global sales of semiconductors may fall 2 percent next year as oversupply weighs down on prices.

Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電), AU Optronics Corp (友達光電), Chi Mei Optoelectronics Corp (奇美 電子) and other companies will together put NT$540 billion into the technology industry this year, almost 40 percent of the nation's non-government investments.

TSMC, the world's largest supplier of made-to-order semiconductor chips, said last month it may cut next year's capital spending from the US$2.4 billion budgeted this year.

The global industry's glut of chips may take until the second half of next year to eliminate, TSMC chairman Morris Chang (張忠謀) said.

Semiconductor makers will together spend NT$192 billion for expansion, hiring staff, upgrading equipment next year, almost a quarter less than this year's NT$256, the newspaper said.

Spending by companies that make flat-panel displays, used in computers and personal digital devices may rise 7 percent to NT$190 billion from NT$177 bil-lion, the paper said.

The economy may expand 5 percent next year, slowing from a 5.9 percent growth this year, according to government forecasts. Global economic growth may slow to 3.6 percent next year from 4.2 percent this year, crimping demand for electronic components, the government said.

Taiwanese companies are making their biggest investments in technology this year since 2000, said Michael On, who manages the equivalent of US$30 million at Beyond Asset Management Co.

"Investment in the flat panel industry will definitely decline next year as the makers' utilization rate now stands at around 70 to 80 percent," On said. "They will have to postpone their expansion plans."

AU Optronics, the world's third-largest maker of flat-panel displays used in computers and televisions, may delay building a new plant to make TV screens because of overcapacity, it said on Sept. 15.

Chi Mei, the country's second-largest maker of liquid-crystal displays (LCDs), said it was delaying construction of a fifth plant because of slowing demand, the company said on Sept. 8.

South Korean and Japanese LCD makers have delayed the opening of new factories because of overcapacity, Corning Inc said on Sept. 16.

The Council for Economic Plan-ning and Development said it's more optimistic about the outlook for the country's US$286 billion economy than the Asian Development Bank and the IMF, which are forecasting growth next year of 4.8 percent and 4.1 percent, respectively. For this year, the government is projecting a 5.9 percent expansion.

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