HSINCHU, Taiwan -- Taiwan's silicon foundry giants have given gloomy forecasts for their 2001 net income.
Taiwan Semiconductor Manufacturing Co. sees net profit this year at NT$25.7 billion ($780.0 million), falling 60% from 2000. United Microelectronics Corp. forecast a 70% slump in profit to $403.0 million over the same period.
The full-year sales predictions of TSMC is $4.5 billion, while UMC is $2.6 billion, falling 10% and 19%, respectively, compared with a year earlier.
The gloomy forecasts come as TSMC and UMC -- the world's biggest foundries -- reported sharp declines in first-quarter profits, indicating the current semiconductor slump may drag on for a couple of quarters.
"The overall semiconductor market in the first half of 2001 is in serious decline compared to the rapid growth of the semiconductor market in year 2000," said K. C. Chen, a vice president of TSMC, Hsinchu, Taiwan. "The visibility of the market conditions in the second half of 2001 is still limited."
TSMC and UMC are suffering from weak demand because inventories piled up at their major customers such as Altera Corp. and Xilinx Inc., some analysts said. "There won't be any significant improvements [in inventories] until after the third quarter," said Eric Wang, head of regional semiconductor research at ABN AMRO in Taipei.
TSMC projected it will earn $533.6 million from April through December of this year. That's relatively reserved compared with the $255.2 million profits already made in the year's first three months.
UMC's target is even more pessimistic. It sees profits in the second through the fourth quarters of $207.9 million, just a little above the $196.1 million in the March quarter alone.
"Even though it remains to be seen whether the industry would recover in the third or fourth quarter, the second is definitely the bottom," UMC chairman John Husan told institutional investors. "We're trying very hard not to lose money in that quarter."
The Hsinchu-based company said that June-quarter sales would shrink 30% or more sequentially, run rates at its wafer fabs would drop to 50% or below, and wafer prices would remain steady.
In the first quarter, UMC's averaging selling prices rose 2% sequentially thanks to the shift to more advanced 0.18-micron and 0.15-micron process technologies. About 443,000 8-in. equivalent wafers were shipped during the quarter.
Some 46% of UMC's first-quarter sales came from the U.S. market and 24% from the Asia-Pacific region, dropping from 47% and 26% in the previous quarter, respectively. Sales from Europe jumped to 28% from 24% and Japan remained unchanged at 2%, the company said.