Semiconductor industry showing signs of recovery

Taiwan's crucial semiconductor industry, dragged down by a global recession in the information technology sector, appears to have hit the bottom and is showing signs of recovery, analysts say.

"It's very certain that the chip industry has bottomed out judging from companies' sales figures and their own analysis," said Rick Hsu, semiconductor analyst with the Nomura Securities Co in Taipei.

"Local IC firms have received more business orders on rising overseas demand for personal computer and mobile phone makers," he said.

But Hsu said the semiconductor industry would need some months for consolidation before an upturn could be seen, saying he expected positive year-on-year growth to emerge in the second or third quarter of next year.

Several leading semiconductor companies had registered their lowest level of sales in the third quarter of this year and declines were beginning to level off in November, he said.

Taiwan Semiconductor Manu-facturing Co (TSMC, 台積電), has already heralded the trend by raising its sales and earnings forecast for this year.

Improvement in the company's performance will persist into the first quarter of next year, TSMC chairman Morris Chang (張忠謀) has said.

United Microelectronics Corp (聯電), may also see a turnaround beginning early next year, said Alan Tseng, analyst with Capital Securities Corp (群益證券).

TSMC on Monday raised this year's parent pre-tax profit forecast by 54.8 percent to about NT$9.35 billion (US$271 million) from NT$6.04 billion projected in September. It also marked up this year's sales revenue by 2.8 percent to NT$125.36 billion from NT$121.89 billion.

"Other than personal computers, orders for communication and consumer electronics products have also gone up," Chang said.

"I'm more optimistic than I was a month ago," he told institutional investors on Tuesday while reviewing the company's third quarter performance.

The raise in profit reflected a steady expansion in shipments of high-margin products and a further sequential sales upturn in the fourth quarter of the year, Taisec Securities Inc (太祥證券) analyst Chao Chih-chiang said.

"The company must have been enjoying a greater inflow of orders for products that require more advanced technology."

In the nine months to September, Taiwan's semiconductor production dropped 2.3 percent to NT$398 billion (US$11.5 billion).

The Industrial Technology Re-search Institute projected this year's semiconductor output would plunge 26.6 percent to NT$514.09 billion (US$14.89 billion), worse than its earlier estimate of a 12 percent fall.

Worldwide semiconductor revenues are projected to fall 35 percent to US$147 billion this year in the wake of the Sept. 11 attacks in the US, according to Dataquest Inc, a unit of Gartner Inc. Next year is seen as a recovery year, with worldwide semiconductor revenues growing an estimated 3 percent to US$152 billion, a Dataquest survey said.