NEW YORK -- In another ominous sign for the IC and semiconductor-equipment industries, Taiwan's two leading silicon foundry providers are expected to cut their capital expenditures for 2002--again, according to a report from SG Cowen Securities Corp.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and United Microelectronics Corp. (UMC) have already cut their respective capital spending plans since the beginning of the year, but the ongoing and severe IC downturn has prompted the two foundry giants to lower their targets.
"While both UMC and TSMC have not officially changed their capex outlook, we expect 2002 budgets will come in below their stated plans," the report from SG Cowen said.
TSMC originally planned to spend about $2 billion in 2002. But so far this year, the Hsinchu-based foundry giant has spent only $655 million, suggesting it will not reach its stated goal, the report said.
UMC planned to spend $1.3 billion in 2002, but has spent $900 million thus far, the report said. The Hsinchu-based foundry provider is expected to spend $1 billion this year, the report added.
It's no wonder the companies are cutting back. "We are looking for a sharper than earlier expected October for TSMC--which will result in Q4 sales -20% Q/Q," the report said. At the same time, SG Cowen has cut its earnings per share estimates for TSMC's Q4 and 2003.
UMC's sales for the month of September "will be below August, which were below July," the report said. "Q3 in aggregate should be +5% Q/Q."
And it gets worse. UMC's sales for October will "likely be flat-to-down vs. Sept. This will bring utilization down to the low 50s%," the report added.