Fri, Jan 11, 2019 - Page 12 News List

Vanguard says trade tensions not a deterrent

USED MACHINES:If the US-China trade issue affects global GDP, prices for 8-inch equipment might fall, Vanguard said, adding that it would consider purchases

By Lisa Wang  /  Staff reporter, in Hsinchu

Vanguard Semiconductor International Co (世界先進) yesterday said that US-China trade tensions would not deter it from accelerating capacity expansions and technology developments this year, given a rosy long-term outlook for driver IC and power management chip demand.

Integrated-design manufacturers, which design and make chips in-house, are to increase production outsourcing as their manufacturing equipment ages and they are unable to make advanced chips, the Hsinchu-based chipmaker said.

Vanguard, which supplies driver ICs primarily for LCD TV panels, said that it would stick to its budget by allocating as much as 80 percent to capital spending, or about NT$3.6 billion (US$116.95 million), on new manufacturing equipment this year, compared with NT$2 billion last year.

Most of the investments would be used to expand clean rooms and purchase equipment for 8-inch wafer production, Vanguard chairman Fang Leuh (方略) told reporters after the company’s annual charity event.

“The company has strong confidence in foundry demand for 8-inch wafers in the long term, so we need to keep investing [in new capacity and technologies],” Fang said. “Trade tensions are just a short-term shock.”

Eight-inch wafer equipment is still one of the most suitable tools for the production of driver ICs used in LCD TV panels, power management ICs and fingerprint sensors, Fang said.

Vanguard is to invest in enhancing its technologies to offer driver ICs for ultra-high-definition 4K or 8K TV panels, as well as advanced power management ICs, he said.

Vanguard has revised downward its business outlook for this year from “cautiously optimistic” to “cautiously conservative,” he said.

Factory utilization might decline due to macroeconomic uncertainty this quarter, but the drop would be “in the manageable range,” he said.

Some economists forecast that the trade dispute between the US and China could affect global GDP growth for last year and this year, but that might help solve supply constraints of used 8-inch wafer manufacturing equipment, as some semiconductor firms scaled down spending on equipment amid an industry downturn, Vanguard said.

The availability of used 8-inch manufacturing equipment has been limited in the past two years, as some chipmakers retired 8-inch fabs, the company said.

The drop in 8-inch wafer supply caused price hikes in the middle of last year, which had rarely been seen previously, it said.

Vanguard would not rule out the possibility of obtaining such equipment via acquisitions, if the timing and terms were suitable, Fang said.

Fang declined to forecast how much the company would increase capacity this year.

The company has installed capacity of 200,000 8-inch wafers per month.

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