TSMC chairman warns on slower growth in future
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(InfoWorld) - The head of the world's largest contract chip maker said his industry will have trouble maintaining sales and profit growth in the future because the overall chip industry has slowed down and there's a lot more competition. Taiwan Semiconductor Manufacturing Co. (TSMC) plans to expand to new markets and find new work in product areas such as chips for mobile phones, digital cameras, and other consumer electronics devices in order to meet these challenges, said Morris Chang, the chairman of TSMC, at the International Solid-State Circuits Conference in San Francisco on Monday. The company released information from his speech. Overall revenue growth in the chip industry has slowed to around 6 percent per year between 2000 and 2010, from 16 percent each year prior to 2000, he said. At the same time, more new rivals have entered the contract chip making business. His company will have to find new ways to grow despite these challenges, he said. "Growth opportunities exist in cell-phone applications, game systems, digital TV, LCD displays, power management, MP3 devices, and digital cameras," a paper Chang submitted to the conference reads. Developing closer relationships with the chip design companies that create chips for these kinds of products will be a key strategy for TSMC in the future. TSMC manufactures chips that are designed by other companies, a business model it pioneered. Prior to the Taiwanese company's founding, small chip design firms had to ask Intel, Motorola, and other big chip makers to make their chips, and these companies would only comply if their factories weren't being fully used already. Most small companies didn't have enough money to set up their own chip factory because the high tech plants used to cost around $1 billion each. Now, a new one can cost $3.5 billion. TSMC stepped in to fill the gap, and the result has been the steady growth of chip design companies that never build their own factories. They rely on TSMC or other foundry chip makers, including Taiwan's United Microelectronics Corp. (UMC), to manufacture their chips. Mobile phone chip developer Qualcomm and graphics chip designer Nvidia are two examples of companies that have been wildly successful, despite not owning their own factories. They farm out production to foundries such as TSMC and UMC. The success of TSMC and UMC has caused a number of new competitors to enter the chip foundry business. IBM, Samsung Semiconductor, and China's Semiconductor Manufacturing International Corp. (SMIC)Â are all examples of latecomers to the foundry business. These new rivals have been able to survive, and in some cases thrive. "The growth of the industry has attracted many companies to offer foundry services. Consequently, competition between these companies increases the potential for commoditization of foundry services," according to Chang's report. He goes on to say that going forward, the best defense for TSMC will be to engage with chip design customers far earlier in the developing stage of their products, and to offer a wider range of production services. TSMC and UMC hold around a 75 percent share of the global chip foundry business, according to investment banking firm Merrill Lynch & Co. Last week, TSMC said itÂ opened its first office Bangalore, India, to find new customers and help existing ones complete their chip designs faster and bring products more quickly to market. Â
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Technology, media and telecoms chiefs  are expected to be cautious about 2005 when they gather in  Barcelona this week at Morgan Stanley's annual TMT investor  conference.
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Southwest Airlines Co.  plans to slow its growth rate this year and next because of a more cautious view on the U.S. economy and travel demand, its chief executive said on Wednesday
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TECHNOLOGY Neil Moses Chief financial officer, Parametric Technology Corp. "We are not seeing any decrease in customer spending as a result of an economic slowdown. However, if there is not an improvement in the real estate and debt markets over the next several months, this could have a negative impact on the economy."
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The world is a less risky place these days, but that doesn't mean investors should stop preparing for bad times, Goldman Sachs Group  Chairman and Chief Executive Lloyd Blankfein said Wednesday.
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The Treasury secretary said that turmoil in the worldâs financial markets could continue for some time, but he cautioned against hasty introduction of new regulations.
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Stunted growth may bring a good opportunity for investors.
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Applied Materials, the world's largest producer of chip-making equipment, says it has benefited from higher orders but warns demand is likely to wane next year.
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Growth at Reed Business, part of  Anglo-Dutch publishing group Reed Elsevier    , could be slower 2008, its head told a Dutch newspaper  on Wednesday.
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The New York Stock Exchange took another step today toward a hybrid trading system. But that doesn't mean the exchange will be losing its floor traders anytime soon, says  NYSE CTO Steve Rubinow.
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Washington, Dec. 18. (PTI):The growth rate of United States will slow down a little bit next year though the general economic conditions &quot;look very sound,&quot; Bush&#39;s economic advisers have warned.
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Taiwan Semiconductor Manufacturing (TSMC) posted record sales and net profit in the fourth quarter as demand for chips in communications, computers, and consumer electronics products soared, the company said Thursday.The world&#39;s largest contract chip maker said sales grew more than 25 percent year-on-year to NT$93.9 billion (US$2.9 billion) in the three months ended Dec. 31. Net profit increased nearly 24 percent to NT$34.5 billion. TSMC&#39;s previous sales record was NT$88.96 billion in the third quarter of 2007, while its prior record net profit came in the second quarter of 2006, NT$34.0 billion.TSMC&#39;s fourth quarter sales beat its own guidance in part due to increased demand for more advanced chips made using 90-nanometer, 65-nanometer and even finer manufacturing technologies. A total of 10 percent of TSMC&#39;s sales were for 65-nanometer and below technologies in the fourth quarter, up from 7 percent in the third quarter. The nanometer term describes the size of the smallest feature manufactured on a single chip. There are about three to six atoms in a nanometer, and a billion nanometers in a meter. Reducing the size of the features on a chip enables companies to create smaller, more energy efficient, and more powerful chips.&quot;Demand for advanced technology capacity remained very strong throughout the year,&quot; said Rick Tsai, president and CEO of TSMC, during the company&#39;s investors&#39; conference. &quot;This will continue to grow,&quot; he said.The company forecast strong guidance for the first quarter of this year, saying mobile phone and PC shipment growth should help bolster the chip industry. TSMC is a bellwether for the global IT industry due to the number and variety of chips it produces for a range of electronic gadgets.TSMC predicts its revenue will drop to between NT$87 billion and NT$89 billion in the first quarter, a slimmer decline than analysts had expected.TSMC&#39;s biggest rival, Taiwan&#39;s United Microelectronics predicted a far worse first quarter, with revenue forecast to decline by as much as 15 percent and it may post a loss for the quarter. UMC posted sales of NT$27.6 billion in the fourth quarter, up nearly 6 percent year-over-year, but its net profit fell 76.1 percent to NT$1.36 billion.TSMC joined a number of other chip makers in slashing its capital spending&#160;for this year. The company predicted its 2008 spending on new factories and production line equipment will reach only US$1.8 billion, down from US$2.6 billion last year. UMC forecast its 2008 capital spending at US$500 million to US$700 million, down from US$900 million last year.&quot;In the coming five years, we believe the capital intensity will be lower than the last five years.,&quot; said Lora Ho, TSMC&#39;s chief financial officer, indicating the company expects to spend less in coming years than it has in the past few years.Several&#160;Taiwanese chip makers have already announced significantly lower capital spending&#160;forecasts for this year, due in part to concerns about global economic growth and partly to a glut of DRAM (dynamic RAM) memory chips.&#160;
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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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Trade group says orders were down 5% from July after almost a year of growth, sees trend continuing. SAN FRANCISCO  - North American semiconductor capital equipment manufacturers reported that orders
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Business & money: Growth will slow markedly next year and is unlikely to see a recovery until after 2009, the CBI warns
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GIANT SEMI foundry Taiwan Semiconductor Manufacturing Co (TSMC) warned that while business is steady, its customers are dealing with rising levels of stock.
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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;