STMicroelectronics NV, Europe's largest semiconductor maker, boosted its forecast for global chip sales growth this year to about 30 percent on higher demand for chips used in handsets and computer products, the company's chief economist Jean-Philippe Dauvin said.
Growth this year will be driven by "unit demand and price increases," Dauvin said at a meeting with analysts and investors in Paris. The company in January forecast global chip sales growth of about 23 percent, with STMicro outpacing that growth.
The chip industry entered a slump after 2000 on lower demand for chips used in mobile phones and computers that lasted more than two years.
Sales next year may continue to rise, Dauvin said, contrasting a report from researcher IC Insights Inc, which forecast global chip revenue next year may drop 6 percent as higher capital spending by chipmakers this year boosts supply and drives down prices.
"Growth above 30 percent wouldn't surprise me for this year," said Ewald Walraven, an analyst at ING Financial Markets, who rates STMicro shares "hold" and attended the meeting. "The remarks from the company clearly mean some researchers out there will still have to adjust their market growth estimates upwards."
Dauvin said global chip sales next year may rise 14 percent, according to what he called an "early prognosis."
"Still, in 2005, we could have a post-election downturn in the US, though Europe will be better next year and China will get bigger and bigger," he told the meeting.
Global semiconductor sales are expected to surge to 217 billion euros (US$259 billion) this year, the highest level since 2000, according to Dauvin, after rising 32 percent in the first quarter.
The total chip market is expected to show growth of, on average, 12 percent a year between last year and 2008, according to Dauvin. Worldwide sales are forecast to climb to 290 billion euros in 2008 from 166 billion euros last year, he said.
To cut expenses, STMicroelectronics is moving some of its older European and US factories to newer factories or to Asia, where labor costs are lower. The measures include moving production using 6-inch wafers to 8-inch wafers or to Singapore.
Wafers are the silicon slices from which semiconductors are cut.
"The way they explained how they will get to the 40 percent gross margin gave me the feeling it may be a cautious goal -- I think they should be able to surpass that as their target excludes any price increases," said ING's Walraven.
The company, created from the merger of Italian and French state-owned chipmakers in 1987, in March said it plans to name Carlo Bozotti as its new chief executive next year to replace Pasquale Pistorio, who will retire after 18 years. Dutheil will be named chief operating officer.
Under Pistorio, the company jointly developed chips with its main clients to demand higher prices and boost margins.
The strategy made Nokia, the world's largest handset maker, STMicro's largest customer, raising concern among some investors the chipmaker is too dependent on one customer.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft