TSMC sees possible chip industry slowdown in 2005 as China comes onstream

TAIPEI (AFP) Sep 16, 2003
The head of the world's leading contract microchip maker, Taiwan Semiconductor Manufacturing Co. (TSMC) expects a semiconductor industry slowdown in 2005 as Chinese mainland producers come onstream and over-supply again becomes a problem.

"Our chairman (Morris Chang) is basically restating his earlier assertion that the semiconductor industry tends to experience a cycle of 'boom and bust' every five years. 2005 appears to be a year of 'bust'," TSMC spokesman J.H. Tseng said.

The expected 2005 slowdown would follow growth in revenue terms of 11 percent for the semiconductor industry in 2003 and 17 percent in 2004, according to Chang.

Chang does not expect the possible industry pullback in 2005 to prove as severe as that experienced in 2001 and it will most likely be similar to that of the early 1990s, Tseng said.

"According to my data here, the semiconductor industry experienced a 32 percent decline in 2001 while it still managed growth of approximately 2.0 percent in 1990."

China's Shanghai Daily reported Monday that TSMC will increase its investment in its chip plant in Shanghai's Songjiang Science and Technology Park by some 220 million dollars to 1.12 billion dollars.

Tseng declined to confirm the report.

"All we have to say right now is that there has been no change to our plan (in Shanghai). We will invest a total of 898 million dollars and production in small volumes is expected to get under way in the fourth quarter of 2004 at the earliest," he said.

SPACE.WIRE