Taiwan’s IC design industry could face continued weak global demand and see its production value fall by more than 1 percent next year, the Taiwan-based Topology Research Institute (TRI, 拓墣產業研究所) said.
The TRI cited a research report as saying that sales in smartphones, tablet computers and notebook computers could remain slow, which would continue to adversely impact the global IC design industry.
In addition, the Internet of Things (IoT) still needs more time to develop, so demand from IoT-related devices is unlikely to significantly boost the IC design industry, the TRI said.
The IoT refers to devices of all types, such as security monitors, vacuum cleaners and mobile phones, connected to the Internet and to each other to create a more interconnected user experience.
As a result of slow sales, output of Taiwan’s IC design industry is expected to fall 1.4 percent next year after an estimated 9.5 percent annual decline this year, when business production value is expected to reach US$15.46 billion.
For the global IC design industry, output is expected to fall 4.1 percent next year, the TRI said. This year’s global output is forecast to drop 8.5 percent year-on-year to US$80.52 billion, it said.
The TRI said that more than half of Taiwan’s top 10 IC design houses are expected to record a drop in output this year, including the largest designer, MediaTek Inc (聯發科).
It added that escalating competition from China and a stronger US dollar has eroded the sector’s pricing power, pushing down chip prices by 15 to 20 percent.
The TRI said that it is likely that the global IC design sector would continue to consolidate through acquisitions and mergers next year.
Earlier this year, US-based Avago Technologies Ltd acquired its US counterpart Broadcom Corp in a prominent deal.
China’s Tsinghua Unigroup (清華紫光) — a high-tech group controlled by Chinese authorities — has repeatedly expressed interest in buying a stake in MediaTek, while the company has said that it is open to any form of cooperation with Chinese investors.
The government is mulling whether to conditionally allow Chinese investors to buy a stake in a Taiwanese IC design house, without allowing them to take a controlling stake in local IC firms.
The Ministry of Economic Affairs said that Taiwan is the second-largest IC designer in the world behind the US, and is No. 1 in terms of contract chip manufacturing and IC packaging and testing services.
Chinese investors are conditionally allowed to buy shares in Taiwan’s contract chip makers and IC packaging and testing service providers, but cannot hold a controlling share.
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