United Microelectronics Corp (UMC, 聯電), the world’s second-largest custom-chip maker, said it will probably cut capital spending next year as a global economic downturn forces semiconductor companies to slow expansion.
“The chances of spending exceeding US$500 million are very slim,” Lu I-cheng, a spokesman for Hsinchu-based UMC said in a phone interview yesterday. Spending this year will be at the low end of its earlier forecast for US$500 million to US$700 million, the company said on Sept. 12.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) spokesman Tzeng Jin-hao (曾晉皓) said on Thursday the company hadn’t changed its US$1.8 billion spending forecast for this year and that next year’s budget hadn’t been decided.
Chip foundries, which manufacture semiconductors according to specifications from clients such as Qualcomm Inc and Nvidia Corp, will reduce expansion next year as demand slows, Credit Suisse Group analyst Randy Abrams said on Thursday. Morgan Stanley on Thursday cut its sales-growth estimates for the made-to-order chip industry, citing a slowing global economy.
UMC will spend the majority of its equipment budget next year on upgrading its manufacturing technology instead of boosting production capacity, Lu said, without elaborating.
TSMC, the world’s largest chip foundry, on July 31 forecast sales this quarter will rise as little as 3 percent in US dollar terms, less than the 10 percent average during the industry’s peak period.
“We still have a couple of months of pain,” Abrams said on Thursday at a conference in Taipei. The “third quarter should be okay, but the risk is the fourth quarter.”
Chartered Semiconductor Manufacturing Ltd (特許)the third-largest chip foundry, said its spending will fall “significantly” next year, Abrams said, citing a presentation made by chief executive officer Chia Song Hwee (謝松輝). China’s Semiconductor Manufacturing International Corp (SMIC, 中芯) will cut spending, Abrams said.
Moody’s Investors Service cut Chartered’s credit outlook to “negative” from “stable” on concern demand for chips will fall, Moody’s said in a statement yesterday, affecting US$950 million in debt. The ratings on Chartered’s notes are unchanged at Baa3, the lowest investment level, according to the statement.
Moody’s joins Standard & Poor’s and Fitch Ratings in cutting its credit rating or outlook on the chipmaker on concern that lower earnings will affect Chartered’s finances. S&P and Fitch last month reduced the company’s debt rating to junk.
“This rating action reflects Chartered’s continuing negative free cash flow, weakening operating performance and the anticipated slowdown in market demand over the next 12-18 months,” Moody’s analyst Wonnie Chu (朱惠萍) said in the statement.
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