Organization issues mixed forecasts for Taiwan's chip sectors

Taipei, Dec. 2, 2003 (CENS)--Taiwan's chip industry revenue as a whole will likely grow at an annual rate of 31% while the island's chip-foundry sector may see market share slip to barely 70% next year from this year's 71%, according to a recent study by a government-backed market program.

The Industrial Technology Intelligence Services (IT IS) program financed by the Ministry of Economic Affairs (MOEA) pointed out that the forecast revenue growth rate for Taiwan's chip industry is much higher than the world's projected average of 20.3%. But when it comes to the world market share by the island's chip foundry sector, the percentage is estimated to decline to barely 70% next year from 2002's 73% and this year's 71%.

According to IT IS fellow market researcher M.R. Peng, the optimistic revenue forecast represents that market rebound has taken hold and the market share loss indicates that rising foundry players outside Taiwan are eroding the share of Taiwanese providers. The new players include International Business Machines (IBM) and mainland China's Semiconductor Manufacturing International Corp. (SMIC).

The market analyst forecast Taiwan's chip industry to generate total revenue of NT$1.07 trillion (US$31.4 billion at US$1:NT$34) next year, surging 31% from this year's projected NT$824.3 billion (US$24 billion), a 26% rise from 2002.

Peng estimated the world chip-foundry sector to post an annual growth rate of 25.7% during the 2002-2005 period, higher than the forecast 16.4% increase for the entire world chip industry. In the meantime, global integrated device manufacturers (IDMs), which build chips bearing their own brand names, are estimated to enjoy a 36% annual growth rate while the fabless sector is expected to record an annual expansion rate of 31% worldwide.

Peng analyzed that although Taiwanese foundry players are losing world market share to rising rivals, their profits remain unmatched by the rivals. He pointed out that fabless companies have long been the major revenue contributors to foundry suppliers and IDMs are increasing contract chips from pure foundry players.

The market researcher pointed out that the world chip industry will spend 21% more capital on expansion next year, compared with 8% posted this year, to keep up with the demand growth.