Wed, May 04, 2011 - Page 12 News List

Market researcher warns chipmakers about supply glut

By Lisa Wang  /  Staff Reporter

Gartner Inc yesterday said aggressive capacity expansion by major contract chipmakers, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), would cause severe oversupply in 2013 and drive down factory utilization to as low as 80 percent on average.

The market research firm shrugged off the short-term impact of the March 11 earthquake and tsunami in Japan, saying the disasters would only affect second-quarter demand.

Gartner kept its forecast of a 10.2 percent annual growth in the foundry sector for the whole year to US$31.15 billion unchanged, Gartner analyst Samuel Wang (王端) told a group of reporters in Taipei yesterday.

Instead, the primary concern facing the industry will be the large-scale expansion in 300mm capacity that will result from efforts launched by top contract chipmakers as they vie for a bigger market share this year and next year, resulting in a supply glut in 2013 when aggressive capital expansion translates into massive expansion of capacity, Wang said.

Overall, 300mm capacity is expected to increase by 34 percent year-on-year this year and by 28 percent next year, Wang said, adding that the fast--growing demand for smartphones and tablets would not be able to absorb such significant growth in capacity.

Contract chipmakers who are unable to supply chips made on advanced 40-nanometer and 28-nanometer technologies could suffer a decline in factory usage to as low as 70 percent by 2013 — lower than the average 80 percent, he said.

TSMC, the world’s biggest contract chipmaker commanding 47 percent market share last year, earlier said it planned to mass-produce chips on 28-nanometer technology — the most advanced technology currently available — next quarter.

Wang said TSMC’s rivals, such as GlobalFoundries Inc and Samsung Electronics, could lag behind the Taiwanese company for two quarters or even longer, if GlobalFoundries and Samsung started mass production of chips on 28-nanometer technology by the end of this year as scheduled.

TSMC plans to spend a -record-high US$7.8 billion on new equipment this year and has told investors more than once that it is not worried about overcapacity because its expansion plan is based on customer demand.

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