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Chipmakers set for stable outlook

Asian contract chipmakers including industry leader Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are expected to have a stable outlook this year, riding on the semiconductor's recent recovery, rating agency Fitch Ratings said in its latest report.

That was despite slowing growth for the semiconductor industry, weighed on possible slowdown of the global economy in the second half of the year, said Kevin Chang (張崇人), a semiconductor analyst with Fitch, in the report released on Thursday.

"Profitability has generally improved on the back of increased shipments, although average selling price performance is mixed across the group," Chang said in the report.

Looking more on the plus side, Fitch Ratings said it believed contract chipmakers would benefit from the growing trend among chip designers and chipmakers to farm out more production.

The trend would "allow the [contract chipmakers] sector to maintain its growth momentum in excess of the semiconductor industry overall and expand its share of global IC production over the next two to three years," Chang said in the report.

The world's biggest contract chipmaker TSMC has said its growth would outpace overall semiconductor revenue growth this year, which is predicted to increase by 4-5 percent this year and by 5-10 percent each year over the next 10 years.

TSMC, whose customers include Texas Instruments Inc and Freescale Semiconductor Inc, said in a forum on Monday in Taipei that contract chipmakers would play a bigger role in the semiconductor industry as investment in advanced technologies and development is increasing, while returns are declining.

Meanwhile, United Microelectronics Corp (UMC, 聯電) chairman Jackson Hu (胡國強) said on Wednesday that the firm had noticed that more chipmakers were becoming fab-lite, or fabless, meaning those chipmakers tend to invest less in building their own capacity.

This trend would help contract chipmakers to expand business, Hu said. For UMC, it would help the company to diversify into other areas such as CPUs for computers and memory chips. Hu made the remarks at an investor conference.

In the report, Fitch Ratings gave A-/stable outlook on TSMC, BBB/stable on UMC, BBB-/stable on Singapore's Chartered Semiconductor Manufacturing Ltd (特許), and BBB-/stable on China's biggest contract chipmaker Semiconductor Manufacturing International Corp (中芯).
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