LONDON, England -- So TSMC's chairman Morris Chang isn't convinced that a recovery is underway but feels that it is just that some specific companies, his included, have done well in the second quarter of 2003 (see July 24 story).
When absorbing this point-of-view readers should bear in mind that TSMC has an interest in the status quo being maintained.
One is naturally sceptical of attempts by companies to try and 'talk-up' the markets they participate in, but on this occasion it would seem that TSMC would be well served by the inhibition rather than the encouragement of any rush to purchase foundry services or integrated circuits in general.
Right now, at the turn of the market, Morris Chang's chip manufacturing machine is operating pretty much at maximum efficiency, with in excess of 90 percent capacity utilization predicted for the third quarter of 2003.
It is thought that TSMC's main rival in Tawain, United Microelectronics Corp., is operating at someway behind this figure and Singapore-based foundry Chartered Semiconductor Manufacturing Pte. Ltd., by its own admission, was operating at 55 percent capacity utilization in the second quarter (see July 17 story).
Wouldn't Morris Chang prefer to see this situation last as long as possible? A rapid turn in the tide, would lift the other foundry boats just when TSMC's anchor line is stretched taut.
In other words, a rapid turn in the market -- the usual sort -- would help UMC, Chartered and other foundries would come into efficient operation and force TSMC to order more chipmaking equipment or risk souring relations with customers with lengthening lead times on chip deliveries. And at the point when the equipment is first installed TSMC's capacity utilization would drop, if only temporarily.
In the short term it would benefit TSMC to see a slow and gentle recovery that allows TSMC to enjoy for the maximum time possible the manufacturing efficiency advantage it currently boasts.
In the medium term many of the foundries have 300-mm fab shells that they would like to populate with equipment. But after a couple of years of extremely difficult business conditions, a few quarters of good profits would be useful to help pay for the kit, and TSMC would seem to be ahead in this regard as well.