Chipmakers need access to capital: business group

New Player:GlobalFoundries, which is heavily backed by the UAE, has set a lofty goal of grabbing a 30 percent market share by 2012, thus making it the world’s No. 2


Sat, Aug 28, 2010 - Page 11

The US-Taiwan Business Council urged the government to ensure local chipmakers have adequate access to capital for the purpose of building enough capacity to fend off growing competition from the deep-pocketed United Arab Emirates (UAE) and GlobalFoundries, Inc.

The investment company Advanced Technology Investment Co (ATIC) — wholly owned by the Abu Dhabi emirate — holds a share of about 68 percent in GlobalFoundries, while US chipmaker AMD holds the rest.

“Taiwan and South Korea need to pay attention to the UAE’s plans to become a worldwide chip ­manufacturing hub. GlobalFoundries is the centerpiece of that plan, but the UAE is also seeking to create major technology clusters around GlobalFoundries facilities,” Council president Rupert Hammond-Chambers said in a press release issued on Thursday.

The US-Taiwan Business Council is a membership-based non-profit association, founded in 1976 to foster trade and business relations between the US and Taiwan.

“With fabrication plants and technology clusters in proximity to Abu Dhabi’s international airport, UAE-manufactured chips could be efficiently shipped to both Asian and European markets,” Hammond-Chambers said.

GlobalFoundries, which ­entered the contract chip manufacturing industry last year, aims to seize a 30 percent market share by 2012, which would help the new player replace Taiwan’s United Microelectronics Corp (UMC, 聯電) as the world’s No. 2 contract chipmaker.

To hit that goal, GlobalFoundries plans to spend between US$2.7 billion and US$2.8 billion on capacity expansion this year, mostly in the US and in Europe.

This move comes while Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s top contract chipmaker, plans to boost its capital spending to a record high of US$5.9 billion for this year.

TSMC’s aggressive capacity expansion is aimed at staving off competition from the deep-pocketed GlobalFoundries, by ensuring that TSMC’s capacity would be able to meet global demand and that it could maintain its ­technological leadership, ­Hammond-Chambers said.

TSMC chairman Morris Chang (張忠謀) said on July 29 that he would not comment on any competitors when asked by an analyst about the potential threat from GlobalFoundries.

Chang stressed that TSMC was the largest effective capacity supplier by far.

Though TSMC has sufficient cash, the Taiwanese government has to ensure that its entire chip industry has adequate access to capital to meet the challenge of the UAE’s seemingly unlimited willingness to fund GlobalFoundries’ expansion, Hammon-Chambers said.

The largest Taiwanese chipmakers are currently forecast to lay out US$14.1 billion on capital spending this year, higher than current estimates by market researchers and other industry groups, the council said.