Tue, Feb 26, 2019 - Page 12 News List

Chip industry facing anemic growth

BLEAK YEAR:However, Taiwan’s chip industry should outperform the global industry, an ITRI analyst said, adding: ‘We are not pessimistic about the nation’s chip industry’

By Lisa Wang  /  Staff reporter

The Taiwanese chip industry is expected to experience anemic year-on-year growth of 0.9 percent in production value this year, primarily as demand dwindles amid trade uncertainty and decelerating smartphones sales, the Taiwan Semiconductor Industrial Association’s (TSIA) latest report said yesterday.

The chip industry as a whole is expected to see production value creep up to NT$2.64 trillion (US$85.73 billion) this year from NT$2.62 trillion last year, the association said, citing a forecast by the Industrial Technology Research Institute (ITRI, 工研院).

The latest growth forecast was trimmed from annual growth of 2 to 3 percent estimated previously, the institute said.

The IC industry covers chip design, manufacturing, packaging and testing, with the manufacturing segment accounting for more than 50 percent of the industry’s total production value.

The chip manufacturing sector is to suffer the brunt of the latest downturn as the sector is to post its first annual contraction since 2011 of 0.2 percent in production value to NT$1.48 trillion, the report said.

The chip manufacturing sector is comprised of the foundry and memorychip segments.

“We cut our projection to reflect the adverse impact from world trade uncertainty, and sliding sales of smartphones and PCs globally,” ITRI analyst Jerry Peng (彭茂榮) said by telephone. “Even foundry heavyweight Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) will be affected.”

TSMC last month forecast that its revenue this year would grow 1 to 3 percent year-on-year, but it remains to be seen if the goal can be achieved as the chipmaker has reduced its revenue forecast by US$550 million this quarter due to flawed materials.

The production value of the nation’s foundry segment is to grow by a mere 0.7 percent year-on-year to NT$1.29 trillion, slowing from annual growth of 6.4 percent last year, while the production value of the memorychip segment is to shrink 6.7 percent to NT$18.77 billion after strong growth of 24 percent last year, the institute said.

The production value of the nation’s chip designers is expected to grow 4.1 percent year-on-year, marking the second year of growth since a contraction of 5.5 percent in 2017.

MediaTek Inc (聯發科), the nation’s largest designer of chips for smartphones, said last week that its revenue would be flat or grow slightly this year compared with NT$238.06 billion last year due to stagnant smartphone sales.

However, the nation’s chip industry is expected to outperform the global chip industry, Peng said.

“We are not pessimistic about the nation’s chip industry,” he said.

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