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UMC denies reports of 300mm wafer capacity cuts

Posted: 17 Sep 2002 ?? ?Print Version ?Bookmark and Share

Keywords:umc? 300mm wafer? dvd chipset? consumer electronics chipset? tsmc?

The world's second largest foundry, United Microelectronics Corp., is denying a news report that it will slice in half its 300mm wafer capacity to 5,000 wafers per month by the end of the year. Nonetheless, worries over how much money recession-shaken consumers will spend this holiday season is spurring chip analysts to predict that Taiwan's foundries will make further capital spending cuts this year.

Taiwan's Central News Agency attributed the comments of a UMC cutback to Frank Wen, the foundry's CTO, but a company spokesman later said Wen never made the remark. Instead, he said their 300mm wafer facility - Fab 12A - is already producing "thousands of wafers per month."

Earlier this week, rival Taiwan Semiconductor Manufacturing Co. confirmed that it would cut its ramping of chip production on 300mm wafers back to 5,000 wafers per month by the end of the year, down from two previous estimates of 13,000 and 10,000, as demand has lagged amidst an unsteady economic outlook.

UMC is still "committed" to reaching 10,000 wafers per month by December, the spokesman said.

However, as grim estimates of the Christmas sales season trickle in, analysts are increasingly doubtful over whether the foundries will exhaust their already downgraded capex budgets. For instance, MediaTek Inc., a DVD chipset maker and high-volume customer of UMC, is not expecting much of a boost from holiday shoppers, despite the low cost of DVD players, typically less than $100.

UMC is budgeted to spend $1.3 billion this year on capital equipment, down from an earlier target of $1.6 billion. But so far the company has only spent 26 percent of that, said Chris Hsieh, semiconductor analyst at ING Barings in Taipei. TSMC said it would spend just under $2 billion this year, down from $2.5 billion. But the company has only spent about 25 percent of that, mostly in 1H, Hsieh said.

Hsieh expects that both companies will announce further reductions in capital spending. "At the beginning of the year, they announced big numbers (for capex) but in reality they do not spend that much. They have scheduled most of the spending for 2H, so they have the flexibility," he added.

With little optimism about this year, and because some industry observers now believe a recovery will have to wait till the end of 2003, the foundries seem to be shifting into conservative mode. That is bad for equipment makers, who are set to converge here next week during SEMI Taiwan, Asia's largest semiconductor equipment trade show. As it stands, there may be little near-term interest in big-ticket items.

- Mike Clendenin

EE Times

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