Growth in local semiconductor companies and their international rivals will slow this year if demand stagnates due to weaker economies and dwindling corporate spending on hardware, a local research house said yesterday.
On top of declining demand, aggressive capacity expansion last year could spell trouble for semiconductor manufacturers in absorbing additional product, said the government-backed Industrial Economics and Knowledge Center (IEK,
"Faster capacity growth and weaker demand would check growth this year," IEK analyst James Huang (黃俊勛) said yesterday.
Local semiconductor firms may only see anemic growth this year of around 14 percent, to NT$1.28 trillion, compared with NT$1.11 trillion the previous year, according to IEK's projections.
The foundry business, which makes up a bulky 40 percent of Taiwan's total chip industry by production value, should grow 15 percent to NT$45.31 billion.
In addition to the industrial slowdown, IEK also warned of a growing threat from Chinese semiconductor start-ups such as Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路).
China's largest contract chipmaker is slashing chip prices by up to 20 percent to snare customers from Taiwan's companies, including Taiwan Semiconductor Manufacturing Co (
"They need to fill up capacity on the new production lines to offset heavy-equipment amortization," IEK analyst Eric Jain (簡志勝) said.
The annual growth rate for Taiwan's semiconductor companies may look small compared with last year's expansion. The increase, however, would still outstrip the global chip industry, which may see only 1.2 percent expansion, Jain said, citing data from World Semiconductor Trade Statistics.
Huang identified subdued replacement of personal computers as a crucial factor behind the industry-wide slowdown.
"Aggressive computer replacement from enterprises, which gave a boost to the global chip industry last year, is coming to an end this year," Huang said.
Corporate IT spending is expected to increase 5.4 percent annually to US$2.59 trillion this year, slower than a 7.3 percent expansion last year, according to projections by market researcher Gartner Dataquest.
On the consumer front, corporations are also inclined to tighten their purse strings in expectation of slower economic growth, he added.
"Lukewarm Christmas retail sales serve as a precursor of people being cautious in spending on electronic devices," Huang said.
Last year, Taiwan's semiconductor companies reported a 36 percent jump in production value from 2003, helped by demand for computers and mobile phones, IEK said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to