Foreign institutional investors yesterday predicted a gloomy picture for Taiwan’s major contract chip makers in the fourth quarter amid high inventory pressure, saying that sales are likely to contract by 5 to 15 percent from the previous quarter.
Foreign institutional investors forecast a sales decline of at least 5 to 6 percent for United Microelectronics Corp (UMC, 聯電), the world’s No. 2 contract chipmaker, in the fourth quarter on the back of an inventory correction.
In the case of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chip maker, reviews were mixed on the level of its decline.
Deutsche Securities forecast that consolidated revenue for the fourth quarter is to drop by 6 percent due to increasing inventory pressure, while Goldman Sachs predicted a sales decline of between 5 and 10 percent.
Nomura Securities said TSMC sales are likely to contract by as much as 10 to 15 percent in the quarter due to strong competition from UMC and weak consumer demand.
The forecasts were in line with the companies’ own analysis.
TSMC chairman Morris Chang (張忠謀) said at an investor conference in July that the increasing inventory level will lead to an inventory correction in the fourth quarter and the first quarter of next year.
He added, however, that the correction will be short-term and that a rebound in demand is likely in the second quarter of next year.
UMC chief executive officer Sun Shih-wei (孫世偉) also said at an investor conference in July that increasing inventory levels will be the unknown factor in the company’s performance for the fourth quarter.