The production value in Taiwan’s semiconductor industry this year is expected to soar 31.8 percent from last year to NT$3.6 trillion (US$129 billion), outpacing 10.1 percent growth in the global semiconductor industry, market researcher the Market Intelligence and Consulting Institute (產業情報研究所) said yesterday.
The Taipei-based researcher attributed the strong outlook for the local semiconductor industry to demand for chips used in notebook computers amid a COVID-19 pandemic-induced stay-at-home economy, as well as emerging applications from 5G and artificial intelligence to automotive electronics.
Production in the foundry segment, a pillar of Taiwan’s semiconductor industry, is to expand 20 percent annually to NT$1.9 trillion, driven by higher chip prices as demand continues to outstrip supply, the institute said.
Photo: Bloomberg
Chipmakers would increase prices, passing on increases in manufacturing costs, it said.
“Semiconductor shortages have become a new global norm,” said Cheng Kai-an (鄭凱安), a senior industry analyst at the institute.
“It has become a new business model for foundry companies to ink long-term supply agreements and collect prepayments,” Cheng said in a statement. “Foundry companies are raising prices to reflect higher costs and to boost gross margin. Hiking chip prices will also help avert overbooking, which could lead to supply-demand imbalance.”
For suppliers of DRAM and flash memory chips, prices are to peak in the second half of this year, leaving little room for further upticks, he said.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest foundry service provider, said that it expects its revenue to expand more than 20 percent this year from last year.
TSMC has reportedly raised prices by 10 to 20 percent for new orders.
Local chip testing and packaging service providers are to increase product value by 25 percent this year from last year, benefiting from strong demand, price increases and supply constraints, the institute said.
On top of that, some local companies are to receive orders transferred from peers, as some plants were forced to halt production due to COVID-19 restrictions in Malaysia, the market researcher said.
Chip designers, led by MediaTek Inc (聯發科), are expected to report growth of 33 percent year-on-year this year to cross the NT$1 trillion mark for the first time, to NT$1.1 trillion, it said.
Demand is rising for a wide range of chips, helping to propel revenue growth, Cheng said.
However, supply of microcontroller units, power management ICs and radio frequency ICs might remain tight due to a capacity squeeze at foundries, he said.
The institute said that it expects a global chip crunch to continue next year and in 2023, as it takes time for chipmakers to ramp up new production and for governments to build local supply chains.
Over the next three years, the compound annual growth rate of production value in Taiwan’s foundry sector is expected to be 10.5 percent, it said.
Chip designers and memorychip makers are expected to grow 7.9 percent and 7.5 percent respectively, while chip testers and packagers would expand 7.2 percent, it said.
The US is considering unilateral restrictions on China’s access to artificial intelligence (AI) memory chips and equipment capable of making those semiconductors as soon as next month, a move that would further escalate the tech rivalry between the world’s biggest economies. The measure is designed to keep Micron Technology Inc and South Korea’s leading memorychip makers SK Hynix Inc and Samsung Electronics Co from supplying Chinese firms with so-called high-bandwidth memory (HBM) chips, people familiar with the matter said. The three firms dominate the global HBM market. US President Joe Biden’s administration is working on several restrictions aimed at keeping vital technology
ECONOMY DRIVER: The upbeat sentiment came even though home prices rose 4.8 to 17 percent in the six special municipalities, as well as Hsinchu city and county Housing transactions in the first six months of this year soared 27 percent from a year earlier to 177,000 units, two separate surveys showed, despite steep price increases in some major urban centers. Sinyi Realty Inc (信義房屋), Taiwan’s only listed broker, yesterday said that there was an increase in transactions for new and existing houses as buyer interest spiked. More increases are expected, Sinyi Realty said. The upbeat sentiment came even though home prices rose 4.8 to 17 percent in the six special municipalities — Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung — as well as Hsinchu city and county, Sinyi
YEAR’S FORECAST UNCHANGED: Although the firm plans to introduce a new flagship mobile processor, its customers are being cautious about inventory management MediaTek Inc (聯發科) yesterday reported an 18 percent quarterly decline in net income for last quarter, saying it expects a lukewarm third quarter. The smartphone chip designer’s second-quarter net income fell to NT$29.96 billion (US$912.41 million) from NT$31.66 billion in the first quarter, but on an annual basis it jumped 62 percent. Earnings per share last quarter dropped to NT$16.19, from NT$19.85 a quarter earlier, but rose from NT$10.07 a year earlier. “We see revenue being flattish in the third quarter, because some customers are still consuming their inventories,” MediaTek vice chairman and chief executive officer Rick Tsai (蔡力行) told an online investors’
August Chuang believes the best thing she can personally do to protect her homeland from a Chinese invasion is to buy Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) shares. The 31-year-old Taipei office worker has 70 percent of her domestic assets in the world’s largest chipmaker. It’s been a good investment, with the stock more than doubling since she first bought shares in 2020. But this is more than just a financial decision for Chuang. “TSMC has turned Taiwan into an irreplaceable high-end technology supplier that other countries can’t risk losing,” Chuang said. “That deters China from invading Taiwan. So the stronger TSMC