Global chip sales face decline in economic turmoil

Global semiconductor sales face a decline next year, according to the world's largest contract chip maker. Taiwan...

Global semiconductor sales face a decline next year, according to the world's largest contract chip maker.

Taiwan Semiconductor Manufacturing Company (TSMC), which has half of the sector's global market share, is predicting a fall in sales of up to 9%.

Rick Tsai, CEO at Taiwan Semiconductor Manufacturing Company, yesterday told an investor conference in Taipei, "We are now expecting the semiconductor industry [revenues] to decline by mid-to-high single digits in 2009."

"For the business right now, all customers are adjusting their inventories and they are very cautious on (submitting) orders."

He was speaking as TSMC reported its latest quarterly results, showing net profit of $930m in the July-September period, a shade higher than the previous year - an increase of 0.6% - and in line with analysts' forecasts.

Lora Ho, TSMC's CFO, said, "With global financial markets going through unprecedented turmoil and the world economy in a high state of uncertainty, most of our customers are aggressively paring their inventories and have thus reduced significantly their wafer demand."

TSMC predicted lower sales in the final quarter as well as next year. And it is planning to cut capital spending in 2009 by 20% from $1.8bn this year.

Earlier in the week, its rival UMC reported its first quarterly net loss in seven years, and also predicted a decline in sales.

Chip makers have been hit by the global economic slowdown, which is leading to fewer orders by manufacturers of PCs and other consumer gadgets.

Tsai said, however, that the impact would be less severe than the fall-out from the bursting of the technology bubble in 2001.

He said, "We all feel the rage of the storm. However, it is different from 2001," adding, "the magnitude is smaller."

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