Taiwan Semiconductor Manufac-turing Co (
The biggest maker of custom-made computer chips didn't specify which PC companies placed new orders. Hsinchu-based TSMC counts among its networking customers Altera Corp, the No. 2 maker of programmable semiconductors, and Broadcom Corp, which packages chips that run networks.
"Networking is still little a bit worse" than PCs and will remain so until "the third or fourth quarter," said Tseng Fan-cheng (
A revival in demand is key for TSMC and other chipmakers, which expanded aggressively in the past few years, anticipating more orders. Tseng was in Singapore to open a US$1.2 billion chip plant it jointly set up with Royal Philips Electronics NV.
"The slowdown in global demand since the fourth quarter of last year, particularly in US, greatly affected semiconductor growth in 2001," said Philip Koh, senior analyst at Gartner Dataquest. "The outlook for the semiconductor industry this year is gloomy."
Affected by slowing orders, only half of TSMC's manufacturing equipment is currently being used. Tseng expects to maintain that level with "a gradual pick-up" in the fourth quarter. He didn't specify how much equipment TSMC must use to be profitable.
With factories half idle, TSMC imposed a hiring freeze in Taiwan, though it doesn't plan to fire workers or close plants, Tseng said. The company cut as many as 280 jobs at its US unit WaferTech LLC because "the labor cost in the US is too high," he said.
TSMC also cut prices for some of its chips as demand fell.
However, more orders for advanced chips kept average prices higher and Tseng expects quarter-on-quarter gains in average prices in the second and third quarters.
"Some of our customers are facing pricing pressure on their products and we're working with them strategically to lower the price to let them survive somehow," Tseng said. "But their demand is in the new technology areas so that helped us."
TSMC shares fell NT$1.50, or 1.6 percent, to NT$92.50 yesterday. The stock has risen 18 percent this year, better than the 15 percent gain in the Bloomberg Asia Pacific Semiconductors Index.
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