The combined revenue of global wafer foundries is forecast to decrease by 8 percent year-on-year to US$15.36 billion this quarter, extending last quarter’s downturn caused by political and economic instability around the world, TrendForce Corp (集邦科技) said on Thursday.
Global wafer foundries’ combined revenue for this year might fall by about 3 percent from last year, which would be the first decline in a decade, the Taipei-based market researcher said in a report.
“A glance at 2019 shows a worldwide economy majorly impacted by the tariff disputes between the US government and China, India and Mexico, as well as the conflicts in the Middle East,” TrendForce semiconductor analyst Kurt Chen (陳彥尹) said in the report.
Based on TrendForce’s revenue projection, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which dominates the world’s foundry industry with a market share of nearly 50 percent, would again outperform the global industry this quarter with a comparatively small 4 percent decline in revenue from a year earlier to US$7.55 billion, thanks to increased demand for its advanced 7 nanometer (nm) chips.
However, TSMC said at its annual general meeting on June 10 that production of Huawei Technologies Co (華為) products was declining due to Washington’s trade sanctions on the Chinese firm.
Huawei’s semiconductor unit, HiSilicon Technologies Co (海思半導體), is one of the Taiwanese chipmaker’s biggest clients.
The US-China trade dispute and Washington’s blacklisting of Huawei would further affect the global wafer industry’s revenue in the second half of this year, including TSMC’s, TrendForce said.
The second-largest foundry, Samsung Electronics Co, is forecast to see revenue fall 9 percent annually this quarter to US$2.77 billion, while GlobalFoundries Inc would stay in third with revenue declining 12 percent to US$1.34 billion, TrendForce said.
However, Samsung potentially has the most to gain from a changing global landscape given the complete network of distribution channels it has established worldwide, not to mention that it is Huawei’s main competitor in overseas smartphone markets, the report said.
“Judging from the smartphone and processor supply chains, Samsung’s adoption of its own Exynos processors in its flagship phones would affect TSMC’s 7nm processes the most,” Chen said.
“If Samsung takes over Huawei’s share of the European market, TSMC would find it difficult to retake the share of the market previously belonging to its flagship processors,” he said.
According to media reports in Taiwan and South Korea, Samsung’s foundry business is likely to receive new orders in the near term, at the expense of TSMC, as Nvidia Corp and Qualcomm Inc reportedly plan to produce their next-generation chips using Samsung’s 7nm technology with extreme ultraviolet (EUV) lithography.
Until recently, Nvidia primarily ordered its high-end graphics chips from TSMC, while Qualcomm last year placed orders for its latest application processors with the Taiwanese firm.
“We attribute the increased focus on Samsung’s foundry business to the company’s aggressive adoption of EUV equipment for the 7nm process,” NH Investment & Securities Co analyst Doh Hyun-woo said in a note on Tuesday last week. “In particular, Samsung has lowered unit prices for certain clients, offering full-mask sets for less than its competitors’ multi-layer masks.”
TSMC’s foundry business would continue to grow over the long term, regardless of political issues, thanks to the company’s strong commitment to its clients, Doh said, adding that, in the short term, some US customers are likely to prefer Samsung due to the US government’s tightening controls.
Even though the trade tensions between the US and China are expected to benefit Samsung’s foundry business, the company could need several years to narrow the gap with TSMC, Yuanta Securities Investment Consulting Co (元大投顧) said.
TSMC beats Samsung in terms of technological leadership and its ecosystem, and most importantly, has no conflict of interest with customers, Yuanta analysts led by Steve Huang (黃柏璁) said in a note last week.
“To attract more external customers, the conflict of interest issue must be addressed, and spinning off Samsung’s foundry business could be a good approach for the company,” the analysts said.
Polytronics Technology Corp (聚鼎科技) yesterday announced that it is buying Henkel AG’s thermal clad dielectric material (TCLAD) business division for US$26 million as the Taiwanese firm aims to improve its technology, product portfolio and revenue performance. Polytronics, headquartered in the Hsinchu Science Park (新竹科學園區), is a supplier of protection components and heat dissipation materials. The firm entered the metallic heat-dissipation substrate market in 2007 and developed a unique solventless production process. Its board of directors approved signing an agreement with Henkel to acquire the German chemical firm’s TCLAD division in the US. The purchase includes all assets and business interests, including equipment,
SIZE MATTERS: Medium-sized hotels that do not have the support of parent groups are more vulnerable and are forced to take action, a REPro Knight Frank researcher said About 50 hotels across Taiwan are seeking to exit the market as they succumb to the bleak business outlook amid international travel restrictions imposed to combat the COVID-19 pandemic. Yomi Hotel (優美飯店) on Minsheng E Road, Sec 1, in Taipei is seeking to transfer ownership with an asking price of NT$950 million (US$32.15 million) and a pledge for a lease contract that guarantees a 3 percent return. The budget hotel, with room rates that start from NT$1,400 per night, maintains normal operations, but has been struggling since March, when the government placed restrictions on inbound and outbound travel. Occupancy rates for hotels in
With the US dollar expected to weaken in the next 12 months due to near-zero interest rates, investors should consider purchasing US corporate bonds, Standard Chartered Bank Taiwan Ltd (渣打台灣銀行) said on Thursday. The bank said that the US Federal Reserve since last month has been buying bonds issued by US companies to curb default rates. The US dollar is forecast to be weaker against the pound, the euro and the yen, as well as the Canadian dollar, the Swedish krona and the Swiss franc, as the greenback lacks high investment returns after the Fed in March slashed the benchmark interest rate
A Bollywood actor’s face tattooed on his arm, Sandeep Bacche’s devotion shocks few in India where stars enjoy semi-divine status, but even there the hallowed silver screen might be losing its shine to streaming services and pandemic fears. “Whenever things get better and theaters begin operations, I will watch three movies a day for sure just as a way to celebrate,” said the Mumbai rickshaw driver, who is recovering from the virus himself. However, others might not join the party. With cinemas shut for months due to a COVID-19 lockdown, and little prospect they will reopen soon, frustrated Bollywood producers have turned to