TSIA Q2 2005 Report on Taiwan IC Industry
2005-08-25
TSIA Q2 2005 Report on Taiwan IC Industry
Aug. 25, 2005
According to WSTS, the Q2 2005 worldwide semiconductor revenue reached US$53.9B, a year-to-year increase of 0.8% and a 2.1% decrease from the previous quarter. Sales quantity reached 109.2B ICs, a 4% decline on-year. ASP dropped 7% from Q1 2005; however, compared with Q2 2004, it grew 5%. Asian market, the only market with a positive growth, grew 7.3%.

The financial reports of TSMC and UMC showed rising capacity utilization in Q2. Although the economic uncertainties remain and industry prospect is still unclear, forecasts show that the IC industry could rise in line with the peak seasons during the second half of 2005.

The TSIA Q2 2005 survey showed that the Taiwan IC revenue (including design, manufacturing, packaging and testing) totaled NT$247.2B, up 4.8% from Q1 2005, and down 10.8% on-year, with NT$64.7B in design, up 12.5% on-quarter and down 1.2% on-year; NT$128.5B in manufacturing, a 0.6% rise on-quarter and a 19.7 % decline on-year; NT$38.1B in packaging (domestic and foreign-invested), a 5.5% growth on-quarter; and NT$15.9B in testing, up 9.7% on-quarter and a 15.2% rise on-year.

Compared to the worldwide semiconductor industry, Taiwan had a higher growth rate on quarter but a lower growth rate on-year. This is due to the higher inventory of the Taiwan IC users in Q2 2004.

The global semiconductor market grew 0.8% in Q2 2005 despite of the price erosion of DRAM and flash products. Driven by the boosted PC shipments, the MPU grew 16.5%. Overall, the worldwide market grew 6.5% in the first half of 2005.

Design
Thanks to the lowering inventory level and the hot sale of PCs and consumer electronics, Taiwan design companies had an average growth of 10% in the traditional low season of Q2. The revenue of LCD driver IC increased about 20% driven by the increased orders for LCD monitor and LCD TV. Revenue of memory makers grew as much as 20% due to stabilized price of niche products for DVD player and graphic card application, and increased shipments of low-power SRAM used in portable devices such as handsets and PDA. The Q2 Taiwan IC design revenue reached NT$64.7B, a 12.5% growth on quarter and a 1.2% drop on-year.

Manufacturing
Due to inventory adjustments of clients, foundry revenue has been growing since Q2 2005. Revenue from the advanced processes has been increasing. Benefited from the strong demand for high-voltage process, the second-tier foundries such as Episil and Vanguard became the out-performers and had an over 20% quarterly growth. The Q2 Taiwan foundry revenue reached NT$83.6B, a 4.2% growth from the Q1 2005.

The increasing capacity and yield of the 12-inch fabs, and the further shrink of process technology have raised the production of DRAM. However, price erosion has deteriorated revenues dramatically. Revenue of Powerchip and Promos even dropped over 10%. Totally, Taiwan IC manufacturing revenue reached NT$128.5B, slightly up 0.6% from Q1 2005.

Packaging and Testing
The packaging and testing revenue has been growing steadily. Most companies have a dramatic growth in Q2 except ASE due to the fire in May. The increased orders mainly came from CPU, chipsets, graphic cards, memory, and communication ICs, etc. Utilization rates were up for traditional lead frame packaging and high-end substrate packaging. Companies in driver IC testing enjoyed a two-digit growth in Q2. Totally, Packaging revenue reached NT$38.1B, a 1.1% up from Q2 2004, and a 5.5% growth from Q1 2005. Testing revenue totaled NT$15.9B, a 15.2% increase on-year, and a 9.7% up from the previous quarter.

Outlook
Taiwan IC revenue in Q3 2005 is expected to reach NT$289.6B, a 17.2% growth from Q2.The design sector would contribute NT$74.5B, a 15.1% rise; manufacturing sector would reach NT$157.1B, a 22.3% growth; packaging sector (domestic and foreign-invested) would reach NT$42B, a 10.2% increase (domestic-invested would comprise NT$32B, a 3.9% up); and the testing sector would be NT$17.4B, a 0.6% up.

Major Indices of Taiwan IC Industry
(NTD: Billion)
2004Q2 2005Q1 2005Q2 05Q2/04Q2 05Q2/05Q1 2005e*
Industry revenue 282.1 235.8 247.2 -10.8% 4.8% 1,133.3
 IC Fabless 66.5 57.5 64.7 -1.2% 12.5% 272.0
 IC Mfg. 155.9 127.7 128.5 -19.7% 0.6% 636.6
  Foundry 98.4 80.2 83.6 -17.7% 4.2% 407.6
 IC Packaging 42.7 36.1 38.1 1.2% 5.5% 161.3
Domestic Pkg. 36.3 30.8 32.4 2.4% 5.2% 135.4
 IC Testing 17.0 14.5 15.9 15.2% 9.7% 63.4
Source: TSIA Q2 2005 Survey, TSIA project, IEK/ITRI
Note: p*-preliminary; e*-estimate
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Email: dior@tsia.org.tw】