Vanguard International Semiconductor Co (世界先進) yesterday said it is seeking new merger-and-acquisition (M&A) opportunities and other ways to expand capacity, as increasing 5G smartphone penetration and a pick-up in the automotive sector are fueling demand for its chips.
The company is also counting on a rebound in the global economy, which is forecast to grow 5 percent this year after contracting by an estimated 4 percent last year, amid optimism that the COVID-19 pandemic would be tamed as vaccinations spread, it said.
Vanguard, which makes power management chips and driver ICs for flat panels, is feeling the robust demand.
Photo: Lisa Wang, Taipei Times
The chipmaker said its factories are already running at full capacity and are unable to fill some customers’ demand.
It has recently implemented a new pricing scheme, charging higher prices if customers want to secure additional capacity that still needs to be built.
“Demand for 8-inch wafers is pretty strong, mainly driven by the work-from-home, remote learning and stay-at-home entertainment trends, amid the pandemic,” company chairman Fang Leuh (方略) told reporters during the year-end media gathering in Taipei.
Demand for driver ICs for flat panels used in TVs, notebooks and other devices are all on the rise, causing widespread supply constraints, Fang said.
Overall, the demand for power management chips outpaces supply by more than 10 percent, estimates by some industry researchers showed.
“Vanguard will continue to invest in new capacity expansion to support customers’ demand and growth,” Fang said. “Seeking a merger-and-acquisition deal is a direction the management is looking at.”
Aside from M&As, Vanguard plans to add a capacity of 10,000 8-inch wafers at its Singapore fab this year and is also considering boosting the capacity of a local fab.
A run-up in the penetration rate of 5G smartphones this year is giving a further boost to semiconductor demand, Fang said.
Globally, 5G smartphones are forecast to account for 37 percent of forecast smartphone shipments of 1.36 billion units this year, compared with 19 percent last year, TrendForce Corp (集邦科技) said.
A 5G smartphone uses 1.5 times more power management chips than a 4G phone, according to Vanguard’s calculation.
A recovering auto industry is also driving demand for power management chips, thanks to higher semiconductor content per vehicle, Fang said.
A new vehicle is equipped with US$607 of semiconductors, up more than 15 percent from US$523 last year, he said, citing statistics from an unspecified research house.
Auto shipments are forecast to increase about 7 percent annually to 77 million vehicles this year from 72 million last year, he added.
To fund the expansion, Vanguard said it is to raise capital spending this year from last year’s budget of NT$3.6 billion.
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