A rising demand for consumer products has become one of the most important sources of demand for semiconductors, but this will present a host of challenges for chip makers.
"Digital consumer electronics is emerging quite fast to be a demand driver," said Morris Chang, founder and chairman of Taiwan Semiconductor Manufacturing at the Computex 2004 exhibition in Taipei.
The rising importance of digital consumer electronics comes as the semiconductor manufacturing industry enjoys "a pretty good boom", he added.
The semiconductor industry grew 18% during 2003 and could grow up to 30% during 2004.
Overall growth will remain strong through the remainder of this decade, reiterating a prediction that the industry will enjoy a compound annual growth rate of between 10% to 12% through 2010, said Chang.
Much of this growth will come from demand for consumer electronics applications, in addition to personal computers and mobile phones.
For example, the rollout of HDTV (High-Definition Television) will completely change the content production, storage, broadcast and reception infrastructure that exists for television.
"It is a very big opportunity for the semiconductor industry in the latter half of this decade," Chang said, adding that opportunities created by technologies such as HDTV bring with them a range of new challenges for the semiconductor industry.
Product life cycles for chips are likely to become shorter and getting new products to market fast will be more important than before, Chang said.
In addition, digital consumer electronics will require greater product differentiation and increased functionality without compromising customer demands for high-quality products available at a low cost.
TSMC will expand its manufacturing capacity for mature production processes, including 130 nanometers, 150 nanometers and 180 nanometers and will continue to invest in leading-edge processes.
TSMC will begin production using a 65-nanometer process in late 2006 and expected to see a 45-nanometer process enter production in late 2008.
TSMC will also make more services available to its customer to help shorten product design cycles and reduce the time it takes to bring chips into volume production, Chang said.
Sumner Lemon writes for IDG News Service