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TSMC's Kin: the second half better be better

Posted on: 18-Apr-2007

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Like everyone else in the semiconductor industry, TSMC managers are wondering how 2007 is going to end up. The chip industry has grown every year since 2002, and if this year and 2008 end up in positive territory it will be the longest growth streak in the industry’s history.
However, the first quarter was shaky, with little spark coming from the Vista operating system, said Kenneth Kin, the senior vice president of sales at TSMC. Kin summed up the situation well at the company’s technology symposium in Austin: “The second half better be better or we are all in trouble.”
Kin zeroed in on the wireless and PC sectors. With about 1.1 billion handsets shipping this year, unit demand is strong. However, “the problem is that most of the growth is in the low-end segment, so the revenue growth is not that great.”
About 800 million humans live in developed economies, another 1.5 billion are in the middle-range nations, and another four billion people are poor. As Kin put it, “those four billion have not been able to enjoy the benefits of the electronics industry, but that is changing now. The technologies we have enjoyed for the last 20 years are now going to the bottom of the pyramid.”
By 2010 about four billion people on the globe will have a cellphone. Also by then, the various efforts to develop a notebook computer costing only $100 to manufacture will have paid off, and PC demand will move up sharply from the current level of about 250 million units shipped per year.
“In the United States the average person spends about $250 a year on semiconductors. But that drops to only $20 dollars in India and China. That presents a tremendous opportunity globally for our industry,” Kin said.
This bottom-of-the-pyramid expansion has ramifications.
TSMC is expanding its 0.18 micron capacity in Taiwan and China, and “is looking for equipment” to increase trailing-edge capacity. At the same time, the bulk of the planned capital spending of $2.6 billion to $2.8 billion this year will go toward expanding Fab 12 in Hsinchu, now at 60,000 300-mm wafers per month. When completed, Fab 12 will have 140,000 300-mm wafers of monthly capacity. Fab 14 in Tainan also will qualify as a gigafab, increasing from 30,000 now to 160,000 wafers per month when all four phases are finished.
These gigafabs each represent roughly $12 billion in cumulative investments. Building them is one thing. Keeping them full – as sales manager Kin reminds us -- is the bigger challenge.
 
 

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