TSMC Receives Increased Orders From Japanese IDMs

Taipei, March 29, 2011 (CENS)--Japanese integrated device manufacturers (IDMs) have ramped up foundry contracts to Taiwan Semiconductor Manufacturing Co. (TSMC) in the wake of the March 11 devastating earthquake, TSMC Chairman and Chief Executive Morris Chang said recently.

Chang made the statement in a keynote speech at a conference organized by the Chinese National Association of Industry and Commerce (CNAIC). However, he emphasized that the added contracts will not produce immediate boost to the company's revenue as these contracts are for non-standard products, which will take these contract buyers some time to redesign their products and verify the foundry's tools and processes.

Japanese contracts have represented around 3% of the foundry player's revenue.

Another encouraging message Chang delivered is that Tokyo Electron Ltd. (TEL), one of major sources of TSMC's chip and fab tools, is operating better than expected in the aftermath, easing fears that an earthquake-crippled TEL would affect TSMC's expansion plan.

Also, the top TSMC executive said adamantly that the 9.0-magnitude temblor “almost has no impact” on his company's operation in the short term when mentioning the reports that supply shortage of raw silicon wafers would hit the company soon after the quake. He noted that the company still keeps one to two months of inventories of the materials and will source the supplies from Europe and America after three or six months if Japanese suppliers are not able to restore the supplies.

Chang said he requests the company's executives in charge of equipment and materials procurements to report to him every day on the supplies.

Chang felt that the lesson the Japan earthquake shows the whole information-technology industry is the importance of supply assurance policy. He said TSMC never orders raw materials just in time as Japanese manufacturers and many Taiwanese manufacturers always do. If TSMC, he noted, had not built up inventories in advance the supply shortage would have immediately hit his company.