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Quake-induced Orders Inundate Top Two Foundries' Capacities

2011/04/08 | By Ken Liu

Taipei, April 8, 2011 (CENS)--Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) have landed unexpectedly excessive orders throughout the second quarter thanks to customers competing for foundry capacities for fear that supply shortage of raw silicon wafers would happen soon.

Shin-Etsu Chemical Co., Ltd. and Sumco Corp., currently the world's top two suppliers of raw silicon wafers based in Japan, have remained unable to resume production since the devastating March 11 earthquake, escalating fears among chip vendors that supplies of the wafers would run short before the two wafer suppliers resume production.

Although many chipmakers have found alternative supply sources in Taiwan, the United States and South Korea in the aftermath of the quake, many of the new sources will take time verifying their products at chipmakers and are estimated to supply only 30-50% of the amounts Japanese suppliers filled in pre-quake days.

Bleak supply outlook has fueled forecasts that supply shortage will broadly hit the supply chains by the end of the second quarter, with raw silicon wafer supplies facing the worst situation.

The fears have prompted chip vendors including Broadcom, Marvell, Qualcomm, Texas Instruments and Freescale to increase contracts to foundries to minimize impacts of supply shortages on them.

Added contracts will keep production TSMC and UMC running at full capacity throughout the second quarter.

Industry executives estimated wafer shipments of the two foundries for the second quarter to increase 10% from the first quarter despite worries about supply shortage.