Texas Instruments Inc, the world's biggest maker of chips used in mobile phones, is increasingly loading orders on its suppliers after digesting most inventories in the first quarter, a company executive said in Taipei yesterday.
Excessive inventories built up in the third quarter of last year have driven the semiconductor industry into a new trough since the last downcycle in 2001. Now the reduction of chip stockpiles is in the limelight, the executive said.
"We believe the majority of inventory clean-up occurred in the first quarter. That has led obviously to improved utilization in the second quarter. We also made some comments on loading some orders we place on that," said TI president Rich Templeton.
Templeton made the remarks in response to a question as to whether better factory usage would also mean placing more orders on TI's local chip suppliers.
He also said his company will extend outsourcing manufacturing of chips used in complementary metal oxide semiconductor (CMOS) image sensors for cameras to local foundries, which it started three years ago.
"We continue to be very pleased with the utility [the sensors] in supporting our customers. We think we will continue to do that," he said during his three-day visit in Taipei beginning Wednesday.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which supplies chips to TI, said last month that wafer shipments would rise by as much as 9 percent at a quarterly pace during the April-June period as its customers are close to digesting most inventories.
As a result, factory usage at the world's biggest contract chipmaker would rebound to over 80 percent in the current quarter, TSMC spokeswoman Lora Ho (何麗梅) said on April 26 at a meeting with institutional investors.
TSMC shares yesterday rose 2.7 percent to their highest this year of NT$56.4 on the Taiwan Stock Exchange.
TI said inventories were reduced to around US$1.25 billion in the first quarter, down US$100 million from the final quarter of last year, according to a company statement released last week.
After lowering the inventories to a desired level in the fourth quarter, the Dallas-based company also said it increased production in its semiconductor factories in the January-March period to catch up demand, according to the statement.
Market researcher iSuppli Corp also said the worldwide electronics industry in the first quarter reduced its excess semiconductor inventories at a faster-than-expected rate, boding well for future chip-market growth.
The value of surplus chip stockpiles in the electronics supply chain plunged to US$500 million in the first quarter, down 51.5 percent from US$1.03 billion in the fourth quarter of last year, the El Segundo, California-based research institute said in a report released last month.
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