SAN FRANCISCO--For the most part, chip makers are seeing a slight seasonal slowdown in the first quarter of 2004.
Or are they? Not all chip makers are feeling the seasonal blues, especially silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), which is seeing better-than-expected wafer starts in January. At the same time, TSMC is expected to raise its capital spending forecast to $1.85 billion in 2004, up from $1.25 billion in 2003.
"Our revised checks on TSMC's wafer start activity appear even stronger than expected in January," said Bill Ong, an analyst with American Technology Research Inc. in San Francisco, in a report. "We believe wafer activity could be up 3-4 percent M/M vs. earlier checks of down 2 percent from prior month's record levels. Pricing environment remains strong on both the foundry wafer and wafer substrate level."
The silicon foundry giant continues to pick up steam heading into 2004. "It appears that the activity level has not let up and January could be another record month in wafer start activity," Ong said. "The demand appears broad based across all product applications, with indication that February will be stronger than seasonal activity even after the Chinese New Year holiday."
Earlier this year, TSMC said its net sales in December 2003 totaled $562 million, an increase of 2.5 percent from November 2003 and an increase of 67.2 percent on December 2002. As a result of the strong December the company's fourth quarter 2003 sales were a record as were the full-year sales of $5.98 billion, up 25.4 percent over 2002, the company said.
TSMC's fourth quarter 2003 sales grew 5.3 percent sequentially to $1,712 million and on a year-over-year basis fourth quarter 2003 sales increased 40.4 percent, according to the silicon foundry giant, based in Hsinchu.
And there's more good news, especially for the chip-equipment community. "We expect TSMC to report 2004 Capex plans in the $1.85 billion range, up about 50 percent Y/Y, when the company releases its earnings on Jan. 29th," he said. Capital spending last year is expected to be about $1.25 billion, while peak expenditure levels in 2000 were at $3.75 billion.
"The chip demand environment remains quite strong with greater than 90 percent fab utilization rates and foundry wafer price increases across all technology nodes," he added.