The global semiconductor industry is to experience a second straight year of contraction in production value this year as the COVID-19 pandemic dampens demand for chips used in mobile phones and automotive devices, TrendForce Corp (集邦科技) said yesterday.
Demand from remote working and online learning, which boosted PC and server sales in the first half of the year, is also likely to ebb in the second half, leading to an opaque outlook for business prospects, the Taipei-based research house said in a report.
Inventory issues might also return in the third quarter, while seasonal demand in the fourth quarter is uncertain, as it largely depends on whether commercial activities will return to normal soon, the report said.
Overall, increases in supply chain inventory might lead to milder revenue growth for the semiconductor industry in the second half, compared with the first half, it said.
This year as a whole, the global semiconductor industry is expected to see its production value fall 1.3 percent annually to US$301.9 billion, excluding the memory chip segment, TrendForce said.
That was a downward revision from its pre-pandemic forecast in December last year of a 3.8 percent annual expansion to US$317.5 billion.
“Due to the impact of the pandemic, consumer electronics, [and] automotive and communications segments are at a higher likelihood of reporting contraction, while computing [and] industrial devices are to have better growth opportunities,” TrendForce said.
Specifically, demand for chips used in servers, commercial notebook computers and Chromebooks are on the rise, but demand for chips for smartphones, consumer electronics and automotive components are slumping, it said.
As smartphone chips and chips used in automotive electronics account for more than 50 percent of the semiconductor industry’s overall production value, their decline drags down the overall chip industry, it said.
TrendForce said it is conservative about the market outlook for the second half of the year.
Integrated device manufacturers (IDM) suffered a drastic decline in production and shipments in the first two quarters due to pandemic-induced factory shutdowns and logistics disruptions, the researcher said.
Poor demand for vehicles added to the slump, it said.
TrendForce said it has a more upbeat outlook about fabless companies and foundries, which are to outperform IDMs, because production at foundries has been spared by the pandemic, as their factories are in places that have been less affected by the virus, the researcher said.
Fabless companies have greater flexibility in adjusting chip specifications to cope with changes in consumer demand, which helps them better weather the crisis, it said.
Fabless companies and IDMs are major clients of foundries.
RESTRUCTURING: Taichung and Taoyuan profited most from local firms moving back high-end manufacturing amid the US-China decoupling of trade ties, the ministry said The government’s “Invest in Taiwan” initiative might this year see NT$627.1 billion (US$21.7 billion) of investment pledges realized, with several firms raising stakes and two dropouts due to customer losses, Minister of Economic Affairs (MOEA) Wang Mei-hua (王美花) said yesterday. Wang made the statement at the monthly meeting of the Third Wednesday Club, a local trade group featuring the top 100 firms of each business sector. Since early last year, the government has launched three programs intended to help local companies grapple with US-China trade rows and the COVID-19 pandemic, mainly through moving production lines back to Taiwan. Thus far, the ministry
JOBS AT RISK? Most Cathay Dragon routes are to be operated by Cathay Pacific or a subsidiary, but it was unclear how Taiwanese workers would be affected Cathay Pacific Airways Ltd (國泰航空) yesterday said it is planning new flight services for Taiwan as it announced a corporate restructuring that included the shutdown of its regional subsidiary, Cathay Dragon (國泰港龍), and could lead to job cuts in Taiwan. Cathay Pacific said the shutdown means that the one round-trip service between Taichung and Hong Kong per day and seven round-trip services between Kaohsiung and Hong Kong operated by Cathay Dragon prior to the COVID-19 pandemic would be terminated. “The parent company is planning a new schedule between Taiwan and Hong Kong,” Cathay Pacific assistant manager for corporate communications Moses Hou (侯恩錫)
OVERHEATED MARKET?: The gauge would be designed to provide more reliable information than private-sector data, and help improve policymaking, the council said The National Development Council (NDC) is considering creating a business climate index on Taiwan’s property market, allowing policymakers to better monitor market movements and intervene if necessary, NDC Minister Kung Ming-hsin (龔明鑫) said yesterday. Kung made the remarks at a meeting of the legislature’s Economic Committee where lawmakers from across party lines voiced concerns about housing price hikes driven by capital repatriation. Kung said that the council is assessing the possibility of creating an index designed to provide more accountable and transparent information than data provided by private-sector market analysts, and could help improve policymaking. The council would compile a report on
STOCK MARKETS TAIEX closes slightly higher The TAIEX closed slightly higher yesterday as market sentiment remained cautious over the Nov. 3 US presidential election. Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was again the anchor stabilizing the broader market, preventing the main board from falling into negative territory at the end of the session, dealers said. The TAIEX closed up 14.88 points, or 0.12 percent, at 12,877.25, on turnover of NT$167.982 billion (US$5.81 billion). TSMC, the most heavily weighted stock on the local market, rose 0.44 percent after fluctuating between NT$451 and NT$456. The semiconductor subindex and the bellwether electronics sector