Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s top contract chipmaker, yesterday said it was not pessimistic about end demand, despite recent lukewarm economic data refueling concerns of a double dip in the US economy.
“Our customers are not nervous” about the recent economic weakness, said Elizabeth Sun (孫又文), director of TSMC’s corporate communication division.
Earlier this week, the US government released weaker-than-expected new-house sales and slower-than-expected manufacturing orders. However, Sun said there were no signs of a big correction like in 2008, adding that the current problem was weak private consumption.
Sun said US corporate profits were rising and that might ultimately lead to more hiring. As long as the jobless rate improved, people would be more willing to spend, she added.
“We still feel the capacity of some technology nodes are still tight, especially with 65-nanometer technology,” Sun said. “The line is still there.”
On July 29, TSMC chairman Morris Chang (張忠謀) said customers were lining up for the company’s capacity, meaning the chipmaker’s supply still lagged behind demand.
Sun’s comments mostly matched Chang’s outlook for the second half. Chang said the weakness would be temporary and that customers inventories were below seasonal levels this quarter and would increase gradually to approach seasonal levels next quarter.
To satisfy customer demand, Sun said TSMC planned to add 7 percent more capacity this quarter from last quarter and the expansion would carry into the fourth quarter.
TSMC plans to spend a record US$5.9 billion on capacity expansion this year and the company aims to expand pre-tax profits at a compound average growth rate of 10 percent in the next five years, Sun said.
However, Compal Electronics Inc (仁寶) spokesman and chief financial officer Gary Lu (呂清雄) said yesterday the world’s second-largest maker of notebook computers would cut its forecast for third-quarter shipments as global demand slows.
“All sectors are weak: Europe is only stable, the US has weakness,” Lu said in a telephone interview with Bloomberg Newswires, without providing the revised estimate before an investors’ conference on Wednesday next week. “Emerging markets, including China, at this moment are very slow.”
The Taipei-based company forecast on June 1 that notebook shipments would rise as much as 10 percent in the third quarter, from the 12.3 million units it shipped in the previous quarter.
TIER SURVEY
Compal was not alone in voicing a conservative short-term outlook, as an increasing number of domestic companies also turned cautious about their business prospects in the coming six months, according to a survey released yesterday by the Taiwan Institute for Economic Research (TIER, 台經院).
With rising commodity prices that may squeeze profitability along with the possibility of China’s economy slowing down, only 29.4 percent of manufacturing firms polled last month expressed optimism about the business climate over the next six months, compared with 34.1 percent a month earlier, the monthly survey showed.
Manufacturers with bearish outlooks remained nearly steady at 17.7 percent last month, from 17.2 percent a month earlier, while those with neutral sentiment rose to 52.8 percent from 48.7 percent, the report said.
Chen Miao (陳淼), director of TIER’s macroeconomic forecasting center, attributed the increasing cautious sentiment to lingering concerns about Europe’s fiscal debt woes.
Despite the arrival of the high season for electronics, European consumers are likely to cut back on their spending as governments may introduce belt-tightening measures to rein in debt problems, Chen said.
Meanwhile, demand from China, which accounts for 40 percent of Taiwan’s exports, is expected to slow down, he said.
Prices for steel, electronic and chemical products experienced downward corrections last month after China took steps to cool its overheating property sector, Chen said.
The overall business climate reading for the manufacturing sector stood steady at 116.88 points last month, compared with 116.64 a month earlier, the report said.
The business prospect gauge for the service sector shed 2.61 points to 124.43 last month, from the revised 127.04 in June, the report said.
The think tank said the decline in tourists last month accounted for the lower reading. Last month, the overall number of tourists to Taiwan dropped 9.07 percent from June, with the amount of Chinese tourists falling 4.75 percent and Japanese tourists retreating by 5.27 percent, the report said.
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