Global contract chipmakers, led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), may see slim revenue growth next year due to an industry slowdown and inventory build-up, market researcher IDC said yesterday.
As a result, revenues for contract chipmakers will remain flat, or post only slight growth next year from the previous year, IDC semiconductor researcher Betty Lin (林蓓黎) said in her latest report. She did not provide specific figures.
"If utilization rates continue to drop beyond the first half of 2005, the outlook will be even more severe," Lin wrote.
In the current quarter, IDC expects factory usage of the world's two largest foundries, TSMC and United Microelectronics Corp (UMC, 聯電) to fall moderately to 80 percent, or lower, from the peak of 100 percent in the second quarter.
Semiconductor Manufacturing International Corp of China (SMIC, 中芯國際集成電路), which has moved ahead of Chartered Semiconductor Manufacturing Ltd (特許) of Singapore to become the third-biggest foundry globally, will maintain its equipment fully loaded as it did in during the same period last year, IDC said.
In contrast, Singapore's state-run Chartered Semiconductor, which has fallen to fourth spot, may see factory usage tumble to around 60 percent in the final quarter of this year, according to IDC.
But IDC said factory usage could bottom out by the second quarter of next year.
TSMC and UMC have warned about a weak fourth quarter as customers have been cautious to place new orders amid continued inventory digestion.
UMC gave a gloomier outlook than TSMC, saying wafer shipments would drop around 15 percent from the third quarter, while factory usage could slide to 70 percent.
Apart from the formidable inventory problem, IDC also warned of the growing threat from Japanese and Korean integrated device manufacturers (IDM), including Toshiba Corp and Samsung Electronics Co, which have returned to the foundry arena.
They may pose a challenge over the long term to dedicated foundry suppliers, especially when they become more aggressive in leading-edge designs, leaving Chinese foundries to chase the more mainstream devices, IDC said.
Chinese factories are about one generation behind the leading chipmakers, and produce mainstream chips, rather than the latest designs.
"It will not be easy for some players, therefore, this will likely lead to a round of consolidation among the pure-play foundry vendors," IDC's Lin said.
TSMC chairman Morris Chang (
"It won't be easy for them to succeed because of a flaw in their business mode. They will directly compete with their clients for orders," he said.