Sat, Dec 18, 2004 - Page 11 News List

China's semiconductor makers may face chip dip

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Semiconductor Manufacturing International Corp (中芯國際集成電路), China's largest supplier of made-to-order computer chips, and domestic rivals may face a slump in demand that earlier affected overseas chipmakers, a researcher said.

China's semiconductor industry "is beginning to feel the impact of the global chip slowdown," ISuppli Corp spokesman Jonathan Cassell said in an e-mailed report.

"Declines will not be as severe initially as in the rest of the world."

Factory use at China's chipmakers will drop to 84.8 percent by the first quarter next year from 86.9 percent in the fourth quarter, the report said.

By the fourth quarter next year, the rate will rise to 85.5 percent, the report said.

Semiconductor Manufacturing on Oct. 28 said its third-quarter factory use was 99 percent and may drop to about 95 percent in the fourth quarter.

The Shanghai-based company and local rivals such as Grace Semiconductor Manufacturing Corp (宏力半導體) are expanding output aiming to take a bigger share of China's chip market, the world's third-largest.

China's chip market, the world's fastest growing, will expand to US$39.7 billion this year and US$68.6 billion by 2008, researcher Gartner Inc said.

Semiconductor Manufacturing, which started production in 2002, and local rivals meet less than 10 percent of the country's demand for chips.

Global sales of semiconductors will shrink next year as oversupply drives down prices, market researcher IDC said on Nov. 4.

The researcher lowered its forecast for next year for worldwide chip revenue.

Industry sales will shrink 2 percent to US$205 billion, compared with a May forecast for 7.5 percent growth, as production outstrips demand and average chip prices fall 7 percent, said Mario Morales, head of semiconductor research at Framingham, Massachusetts-based IDC.

Unless chipmakers cut capital spending by a fifth next year, industry sales may shrink as much as 11 percent next year, he said.

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