TSMC reduces 2011 chip market growth forecast

Using its own economic model, foundry giant Taiwan Semiconductor Manufacturing Co. Ltd now projects a 2 percent growth for the worldwide semiconductor market in 2011, down from its original forecast of 4 percent.

However, TSMC still thinks the foundry chip market can grow 11 percent in 2011, and it expects to outgrow that sector by sticking to its 20 percent 2011 growth target for the company, according to Maria Marced, president of TSMC Europe, speaking on the sidelines of the GSA & IET International Semiconductor Forum being held in Munich.

This estimate puts TSMC in a bearish position in relation to almost all other market researchers and prognosticators who are predicting growth in the range of 5 to 10 percent.

Marced emphasized that TSMC's economic model takes global and regional gross domestic product figures as primary inputs. "We have reduced our estimate for GDP growth in 2011 from 3.6 percent to 2.8 percent," she said.

There are two reasons for this. One is the contagion of weak European national economies. While Greece, Portugal and Ireland are struggling economically, their economic woes have little impact on a global scale. TSMC gives more weight to the problems confronting the much larger economies of Italy, Spain and the United Kingdom. The company expects the combined European weakness to drag the global economy down.

The second reason is the imposition of anti-inflation measures by the Indian and Chinese governments, a move that is beginning to slow the market. Finally the Japan earthquake of March 11 is also likely to reduce GDP in that major economy, Marced said.

As a result TSMC has reduced its growth forecast for the electronic products market from 9 percent to 6 percent. Within this category TSMC has lowered its growth estimate for handsets from 9 percent to 7 percent. Meanwhile, digital CE is now expected to grow just 3 percent in 2011 compared with the previous estimate of 6 percent.

The impact of reduced GDP on equipment markets will play through into the semiconductor market. TSMC has reduced its valuation of the overall semiconductor market in 2011 to $304 million, an increase of just 2 percent from 2010. The semiconductor market excluding memory will perform better with 4 percent growth, down from TSMC's previous estimate of 7 percent.

Marced said she believes TSMC can outpace its peers in the foundry business in 2011 because of the customers and advantages it has in the smartphone market. "Smartphone and tablet computers—the mobile internet is the new killer application," she said.

- Peter Clarke
??EE Times