Taiwan’s IC output forecast at record high for 4th straight year

The production value of the local integrated circuit sector is expected to break a record in 2016 for the fourth consecutive year, driven by rising demand for high-end processors in the global market, the Ministry of Economic Affairs (MOEA) said Thursday.

Strong buying interest in handheld devices, resulting from the launch of new gadgets, pushed up the use of advanced ICs, which benefited Taiwan manufacturers in the IC sector, the ministry said.

It estimated that the output of the local semiconductor industry for 2016 would top NT$1.2 trillion (US$37.5 billion), breaking the record of NT$1.17 trillion in 2015.

Since 2013, the output of the local IC industry has been breaking the record each year, with a growth rate of 16.2 percent in 2013, 23.9 percent in 2014, and 6.2 percent in 2015, the ministry said.

In the first 10 months of 2016, the production value of the local IC sector totaled NT$1.04 trillion, up 5.4 percent on solid demand for electronics devices from end users and efforts by international brands to come up with applications for the Internet of Things, automotive devices and automation, the MOEA said.

It said the pure foundry business helped boost output in the entire IC sector, posting NT$903.5 billion in production value in the 10-month period, up 8.6 percent from a year earlier and accounting for more than 80 percent of the IC sector's total output.

Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the largest pure foundry operator or contract chip maker in the world, holds more than 50 percent share of the global IC market.

In 2015, TSMC accounted for 54.3 percent of global sales in the contract chip market, up 0.5 percentage points from 2014, the MOEA said, citing data from Gartner, an American technology advisory and research firm.

Among other Taiwanese companies, United Microelectronics Corp. (UMC, ??) was third globally, Powerchip Technology Corp. (??) sixth and Vanguard International Semiconductor Corp. (????) ninth, the data showed.

It said the top four Taiwanese contract chip makers accounted for 67.2 percent of the global contract chip market in 2015, little changed from 2014.

In terms of dynamic random access memory chips, output of the segment for the first 10 months of last year totaled NT$102.1 billion, down 12.5 percent and underperforming the entire IC industry due to a drop in product prices, the MOEA said.

It said Taiwanese IC firms have been keen to upgrade their technology to maintain their lead in the global market. In the first nine months of 2016, TSMC's capital expenditure hit NT$215.5 billion, up 24.6 percent from a year earlier, while UMC's capex grew 47.7 percent year-on-year.

Source: Focus Taiwan News Channel