Mon, Aug 28, 2006 - Page 12 News List

IC industry receives second quarter boost

CNA , TAIPEI

Taiwan's integrated circuit (IC) industry production reached NT$337.1 billion (US$10.25 billion) in the second quarter of this year, up 33.6 percent over the same period last year and 9.8 percent from the previous quarter, according to a government think tank.

The Ministry of Economic Affairs' Industrial Technology Research Institute (ITRI, 工研院) forecast that third-quarter output will grow to NT$350.8 billion and annual output will top NT$1,363.3 billion this year, an increase of 22 percent from last year.

According to Peng Mao-jung (彭茂榮), an ITRI analyst, the second quarter is traditionally a slack season for IC design, coupled by a slower market demand for TFT-LCD displays and an oversupply of LCD-driven ICs, and therefore most IC-designers did not register strong performance during the season.

However, small LCD-driven IC-design companies were little affected, recording better sales during the previous season, he said.

Sales of consumer electronic products turned brisk in May, with IC makers also enjoying good business, enabling IC designers to score a production value of NT$77.5 billion in the second quarter, an increase of 6.5 percent from the previous quarter and 19.8 percent over the same time last year, Peng said.

IC manufacturing faced a similar situation, with second quarter output -- traditionally a slow season -- 12.5 percent higher than the previous quarter. Contract chip-making accounted for 5.5 percent of IC manufacturing output.

Taiwan Semiconductor Manu-facturing Corp (台積電), the world's largest contract chipmaker, reported 5.5 percent growth in the second quarter over the first, and yearly growth of 36.9 percent.

United Microelectronics Corp (聯電), the world's second-largest contract chipmaker, scored similar seasonal and yearly growth for the second quarter -- 5.6 percent and 32.4 percent, respectively. Profit margins improved and the utilization of its production capability rose to 80 percent, up slightly from the first quarter, according to ITRI.

DRAM business has been the main driving force behind the substantive growth in Taiwan's IC manufacturing industry in the second quarter of this year, Peng said.

He attributed this to improved production capability and yield of the DRAM business's 12-inch wafer plants, as well as their improved production technologies.

Internationally, major DRAM makers switched some of their production facilities to producing NAND Flash, bringing down the supply of DRAM chips and raising DDR and DDR2 prices, according to the analyst.

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