Tue, Nov 21, 2006 - Page 11 News List

TSMC spending set to rise by as much as 20 percent


The world's biggest maker of customized chips, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), will increase its spending for next year by 10 percent to 20 percent as consumer electronics such as music players and cellphones drive demand.

The company, which expects to spend US$2.6 billion this year, estimates global chip industry sales will expand 6 percent to 8 percent this year and next year, chairman Morris Chang (張忠謀) said.

TSMC also plans to start building a 12-inch chip factory in Hsinchu in April.

"We're still at the upswing of a cycle," Chang said in a Nov. 18 interview from Hanoi, Vietnam.

For a chip factory to be operational, "it takes two to three years to get the equipment and if you move by the swing of the cycle, you'd be lost," he said.

Demand is increasing for mobile phones, digital cameras, music players and TVs, which with other consumer electronics account for more than half of all chip sales, the Semiconductor Industry Association said on Nov. 16.

TSMC's customers include Qualcomm Inc, the world's second-biggest maker of mobile phone processors.

TSMC shares fell 0.3 percent to close at NT$62.2 on the Taiwan Stock Exchange. The stock has risen 2.5 percent this year, lagging behind the 11 percent increase in the nation's benchmark TAIEX index.

For this year, TSMC's clients are still clearing inventory, leading the company to reiterate the forecast it made last month that fourth-quarter sales would decline from the third.

Chang, President Chen Shui-bian's (陳水扁) representative at the APEC forum in Hanoi, said customers may finish clearing stocks by the second quarter, helping demand next year.

"I really don't think the final demand, the consumer demand, will be weak," Chang said. "Our customers are companies that supply the Apples, Microsofts and so on."

TSMC said on Oct. 26 that fourth-quarter revenues will be between NT$74 billion (US$2.3 billion) and NT$76 billion. This is down as much as 10 percent from the NT$82.5 billion of three months earlier. The company's third-quarter profits rose 33 percent to NT$32.5 billion.

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