Taiwan Semiconductor: Making Profits Chip by Chip
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As the chip industry heats up, this is the company to watch.
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We zero in on some of the best investment ideas in the chip sector.
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An investment approach straight from the Oracle's mouth.
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(InfoWorld) - Taiwan Semiconductor Manufacturing Co. Ltd., the world's largest contract chip maker, reported its worst monthly revenue in 20 months on Friday, but analysts applauded the figure as further proof that an industry glut is dissipating. TSMC said its revenue in February hit NT$20.58 billion (US$624.2 million), down 14.3 percent compared to last year and its worst monthly revenue figure since it reported revenue of NT$20.11 billion in June, 2005. Despite the poor showing, analysts said it was a strong figure considering February is a shorter work month, at only 28 days, and that a major holiday, the Lunar New Year, celebrated throughout Taiwan and much of Asia, also slowed work at TSMC factories. Last year, the Lunar New Year, which is usually a week-long holiday in Taiwan, was on Jan. 29. This year, the first day of the Year of the Pig fell on Feb. 18. "I think the February sales figure was fantastic. It was only down about 2 percent from January," said Warren Lau, chip industry analyst at Macquarie Securities Ltd. in Hong Kong. He said TSMC's February revenue was further proof that a chip glut that has hampered the industry for the past several months is nearing an end. But the return to health over the next few months could be specific to TSMC, and not include the wider chip industry. Earlier this week, Advanced Micro Devices Inc. (AMD) said it will miss its revenue goal for the first quarter of 2007, while rival Intel Corp. outlined plans to beat a microprocessor glut and weak corporate demand for PCs by stepping up chip development speeds. The two companies engaged in a price war last year, and continue to suffer as they duke it out in the market, analysts say. Gartner Inc. believes the chip industry won't start to recover from the glut until the second half of this year. Rising inventories in late 2006 caused companies to slow production and ease off on buying new machinery as a drop in orders idled more and more production lines, said David Christensen, a Gartner analyst, in a recent report. "Look for this trend to continue through the first half of 2007, followed by a slow recovery in the second half of the year," he wrote. Last month, the market researcher revised down its revenue growth estimate for the chip industry this year to 6.4 percent, from a previous forecast of 9.2 percent. Gartner estimates chip industry revenue will reach US$259.7 billion this year. Â
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(InfoWorld) - In the most significant easing of investment regulations for Taiwan's technology industry to date, the island's government will allow two chip makers to build factories in China and one more to invest in a Chinese rival, a high level official said Tuesday. Memory chip makers Powerchip Semiconductor and ProMOS Technologies will both be allowed to build chip factories in China, while Advanced Semiconductor EngineeringÂ (ASE) will receive approvalÂ for a plan toÂ buy a low-end chip assembly companyÂ based in Shanghai. ASE is the world's largest chip assembly company. "An official announcement will be made on Wednesday," said Joseph Wu, chairman of the Mainland Affairs Council, Taiwan's official governing body for China relations. A group of government agencies agreed to the easing Monday during a committee meeting. The final step in making the decision formal is for the Taiwan Investment Commission, which is in charge of vetting China-bound investment applications, to give its stamp of approval and publicly announce the new measures. The easing is seen as a major breakthrough for Taiwan and China. For China, it could reinvigorate a chip industry that has slowed over the past few years as major chip makers such as Semiconductor Manufacturing International Corp. (SMIC) posted a string of money-losing quarters. It also represents a token of goodwill by Taiwan to political enemy China. Taiwan and China remain enemies after splitting in 1949 amid civil war. The island fears China could use chip technology to bolster its military capabilities against Taiwan. Despite the strained relationship and tough investment rules, China remains by far the favored destination for Taiwanese investment due to their shared language and culture, and China's lower costs and huge potential market. The formal announcement expected Wednesday will likely fall short of hopes held by Taiwanese chip makers. Companies have been lobbying the government for years to allow them to transfer 0.18 micron chip production technology to China, but such an opening will have to wait, Wu said. Taiwan Semiconductor Manufacturing Co. (TSMC) has made a strong push on the 0.18 micron issue, in part because Chinese rivals such as SMIC are already using the technology, and are able to win over customers because of it. Taiwanese regulations currently only allow its chip makers to use 0.25 micron technology in China. ASE's board of directors approved a plan to last month to invest $60 million in Global Advanced Packaging Technology, a Shanghai company.
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Another semiconductor company, another bleak outlook. How low can you go?
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(InfoWorld) - Taipei may have to rethink its China investment policies in the wake of an offer by a foreign group to buy the world's largest chip assembly company, Taiwan's Advanced Semiconductor EngineeringÂ (ASE). Part of the attraction of the deal is that by changing ownership, the company would cease to be Taiwanese, and therefore be allowed to invest in China as it pleases, pundits say. The trouble for many Taiwanese chip makers in recent years has been the tight leash Taipei keeps on technology investment bound for political rival China. Taiwan and China remain enemies after splitting in 1949 amid civil war. The island fears China could use chip technology to bolster its military capabilities against Taiwan. Despite the strained relationship and tough investment rules, China remains by far the favored destination for Taiwanese investment due to their shared language and culture, and China's lower costs and huge potential market. The deal for ASE, a $5.5 billion offer from a consortium led by the private equity firm Carlyle Group, would be a huge positive for ASE, transforming it into a foreign entity and allowing it to build chip assembly plants in China, according to Fubon Securities. Currently, ASE has no chip assembly investments in China, despite the fact that earlier this year Taipei gave a green light to chip makers to invest in low-end chip assembly. Despite the apparent opening, not a single application has been approved by Taipei, and companies remain unsure of how to proceed with such investment. Analysts argue that the approval process remains very much subject to politics in Taiwan, due mainly to the rivalry with China. A foreign takeover such as the one Carlyle and ASE are discussing would remove such political pressures and put China investments on the fast track. Indeed, theÂ embattled former chairmanÂ of chip foundry giant United Microelectronics, Robert Tsao, was quoted by local media as saying the possibility of such buy-outs excited him, and that UMC would welcome similar offers. Tsao is a prime example of the difficulties Taiwanese tech companies and executives face when investing in China. He and another key UMC executiveÂ resigned early this yearÂ after beingÂ indicted by Taiwanese prosecutorsÂ over their alleged role in the establishment of Chinese chip maker, He Jian Technology (Suzhou). The court case is still being heard. The government began investigating UMC over He Jian a few years ago, and fined UMC for failing to apply for permission to work with He Jian. Taipei has also leveled fines on UMC and He Jian executives. Tsao and his colleagues maintain that they have done nothing wrong. For its part, the government plans to review the possible ASE deal over its potential impact on the Taiwan Stock Exchange, since the company would likely be de-listed if it is purchased by Carlyle. Economics Minister Chen Ruey-long on Monday said Taipei needs to keep on top of the issue in case it becomes a trend, because such purchases could have long term effects on the economic development of the island. The review has nothing to do with China policy, he said.
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Korean chipmaker expects global sales will halve next year; sales growth could be in single digit. SEOUL  - Growth in global semiconductor sales will probably halve next year and memory chip sales
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We&#39;ve known about &quot;strained silicon&quot; for a while--but now there&#39;s a better way to do it. Straining silicon improves chip performance.
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This week, we take a look at a pair of low-riding semiconductor companies.
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SAN JOSE, CALIF. - Everywhere you look at the Fall Processor Forum, there&#39;s another chip with more than one core. At this annual industry conference where chip companies discuss the designs they&#39;re working
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Move over silicon chips, there is a new semiconductor king on the horizon. Silicon carbide&#39;s (SiC) potential has been known since the 1950&#39;s, but the properties that make is attractive also make it hard to work with.
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Three more Taiwanese chip makers plan to&#160;spend significantly less money on new factories and equipment&#160;this year as a DRAM (dynamic RAM) glut and uncertainty about the global economy weigh.Lower capital spending forecasts in the chip industry are a sign the global IT industry is on edge about future demand. Analysts have expected DRAM makers to cut back on spending for a long time due to&#160;falling chip prices. Prices for mainstream DDR2 (double data rate, second generation) chips remain below production costs, and most DRAM makers have reported losses for the fourth quarter.Powerchip Semiconductor, Taiwan&#39;s largest memory chip maker, Wednesday said it plans to spend NT$35.1 billion (US$1.09 billion) on new chip factories, technology and production line equipment this year, less than half the NT$86.3 billion it spent last year.Powerchip&#39;s smaller rival on the island, ProMOS Technologies, also more than halved its projected 2008 capital spending to US$800 million, down from US$1.84 billion last year. The company also put the expansion of its fourth 12-inch factory on hold pending a rebound in the DRAM market.United Microelectronics (UMC), the world&#39;s second largest contract chip maker, forecast its 2008 capital spending at US$500 million to US$700 million, down from US$900 million last year.The company&#39;s customers have turned cautious due to global economic worries, said Jackson Hu, CEO of UMC, at an investors&#39; conference in Taipei on Wednesday. The company forecast its chip shipments will decline as much as 15 percent in the first quarter, compared to the fourth quarter of last year as chip demand weakens, particularly for communications chips.Global semiconductor equipment spending is forecast to fall 9.9 percent to US$40.3 billion this year, from US$44.8 billion last year, according to Gartner. The market researcher blamed over-investment by DRAM makers in 2007 for the cutback in semiconductor capital spending this year. Concerns about a U.S. economic recession have also put chip makers in a cautious mood, Gartner said in a report published early this month.&#160;
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Analyst Malcolm Penn looks back over sixty years of the silicon chip industry.
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Computex: As Via finds traction in the ultraportable market, it pushes the limits of small form factors.
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New nonsilicon transistors could be integrated into existing chip-making processes.
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When Robert Poor looks at the world, he sees 50 billion embedded microcontrollers, the workhorse chips inside cars, traffic lights and air conditioners, doing their jobs in splendid isolation. Then he imagines what will happen when they all can talk to one another.