Silicon wafer supplier Formosa Sumco Technology Corp (台勝科) yesterday gave an upbeat outlook for the current quarter, as it expects that deteriorating supply constraints would continue to drive up wafer prices, which would help it defy a slowdown in consumer electronics demand.
The company said chip demand is strongly underpinned by exuberant demand from 5G-related devices, automotive electronics and power management chips, which most semiconductor companies consider long-term growth engines.
Customers’ silicon wafer inventories are running low due to prolonged supply-demand imbalances over the past few quarters, the company said in a presentation at an investors’ conference.
Photo: Reuters
“Tight supply of 12-inch silicon wafers for logic and memory chips aggravated during the second quarter. The company is unable to allocate any wafers for customers who did not ink long-term supply contracts,” Formosa Sumco said. “We are also unable to catch up with customers’ demand for 8-inch wafers.”
Formosa Sumco expects supply constraints to extend at least into this quarter, leading to further price increases on the spot market, the company said.
Formosa Sumco, which was founded by Japan-based Komatsu Ltd and Taiwan’s Formosa Plastics Group (FPG, 台塑集團) in 1995, said wafer demand exceeded supply last quarter, which drove up 8-inch and 12-inch wafer spot prices.
The company signed more long-term supply agreements with customers last quarter, extending the coverage to most of its silicon wafers, it said, adding that the contract prices have picked up during the first three months of this year.
Formosa Sumco budgeted NT$18.9 billion (US$643.1 million) for capital spending this year, far exceeding last year’s investment of NT$1.4 billion, as it is seeking to set up a new 12-inch fab in Yunlin County’s Mailiao Township (麥寮) that would cost NT$28.26 billion.
The company aims to ramp up output, with the new factory scheduled to start production in 2024.
The new investment also reflects Formosa Sumco’s bullish view about the silicon wafer market for the coming years.
The company yesterday said that the silicon wafers scarcity would likely persist, given robust market demand and decreases in customers’ wafer inventories.
Global supply of 12-inch silicon wafers would be 3 percent below market demand this year, it said, adding that the supply gap might widen to about 10 percent next year.
Geopolitical tensions, as well as COVID-19-induced supply chain disruptions and lockdowns in China, have affected consumer electronics demand, the company said, but added that this would not dampen customers’ demand for silicon wafers, as they are adjusting product portfolios to cope with the weaker consumer market.
Formosa Sumco shares rose 2.32 percent to NT$265 yesterday, outperforming rival GlobalWafers Inc (環球晶圓), whose stock price rose 0.64 percent to NT$626.
The TAIEX slid 0.73 percent.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS