Thu, Aug 17, 2006 - Page 12 News List

TSMC projects 20% sales spike

HOT CHIPS Chairman Morris Chang said performance would be even better if the government lifted restrictions on the use of advanced process technology in China


Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電), the world's largest made-to-order chipmaker, is expected to post a 20 percent growth in sales this year from last year, its chairman said at a gathering of business leaders yesterday.

Last month, the company reported that its second-quarter earnings soared 85 percent to NT$82.12 billion (US$2.5 billion) from a year earlier and said it expected revenues to drop about 2 percent to between NT$79 billion and NT$80 billion in the current quarter.

Performance in the third quarter would remain stable, or decline slightly from the second quarter because of an inventory correction in the supply chain, chairman Morris Chang (張忠謀) told Taipei-based business group Third Wednesday Club (三三會).

In his speech, Chang said that TSMC would be able to generate more value in future if the government allowed chipmakers to use 0.18-micron process technology in China.

"[Such policy] liberalization will pose no threat to local manufacturers, as [0.18-micron process] technology is mature among Chinese chipmakers with fair yields," Chang said. "As I said at the Conference on Sustaining Taiwan's Economic Development [last month], I hope the government will loosen this restriction."

Although many countries have placed restrictions on exports of key technologies, Taiwan has the most stringent regulations, followed by the US, Chang said.

TSMC is the only local chipmaker that obtained the government's approval in 2004 to set up a factory using 0.25-micron process technology in Shanghai.

Although the government agreed in principle to allow local semiconductor companies to build a total of three 8-inch wafer plants using 0.25-micron process technology in China by the end of last year, the applications of Powerchip Semiconductor Corp (力晶半導體) and ProMOS Technologies Inc (茂德科技) have still not been approved.

TSMC's investments in China were aimed at increasing value for the world's largest contract chipmaker, not saving costs, Chang said.

TSMC's local factories churn out 700,000 wafers per month, while its smaller Shanghai plant produces only 15,000 to 20,000 wafers per month. As a result, the overall cost of manufacturing in China is higher and shows no signs of declining in the near term, he said.

However, the rapidly expanding market in China cannot be ignored, and policy liberalization would create a much larger market for Taiwanese companies, Chang said.

Frank Huang (黃崇仁), chairman of Powerchip, who also attended the gathering, said it was unwise for companies to jump on the China bandwagon, as a recent report had claimed that only 40 percent of the chipmakers currently competing in China would survive.

Citing an analyst from Semiconductor Equipment and Materials International trade group, the report, published by Information Week last month, said that regardless of the soaring demand for integrated circuits in China, more than half of chipmakers with wafer fabs there were projected to fail. The report said this was because many China-based companies lacked partners and the manufacturing expertise to compete in the semiconductor market.

Chang shrugged off the report, saying that semiconductor companies could maintain operations as long as they had sufficient cash flow.

However, he admitted that the playing field was not always level in China, as the government there habitually funded homegrown chipmakers such as Semiconductor Manufacturing International Corp (中芯).

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