TSIA Q1 2005 Statistics on Taiwan IC Industry
2005-06-10
TSIA Q1 2005 Statistics on Taiwan IC Industry

June 10, 2004

According to WSTS, Q1 2005 worldwide semiconductor revenue reached US$55.1b, a year-to-year increase of 12.8%; and a 0.01% drop from Q4 2004. Sales quantity reached 103.3b ICs, a 1.3% increase from Q1 2004. ASP remained at the last quarter’s level of US$0.53, an 11.3% up on-year. Asian market has been playing a critical role, with the world highest year-to-year growth rate of 22.4% in Q1 2005.

However, as the monthly semiconductor revenue, as a whole, continues to decline, industry outlook remained gloomy. Financial reports of TSMC and UMC showed that capacity utilization rates were still low in Q1; however, the rates are expected to rise gradually in the second half of 2005. Although economic uncertainties remain and industry prospect is still unclear, forecasts show that IC industry could rise in line with the peak seasons in the second half of 2005.

The TSIA Q1 2005 survey showed that Q1 Taiwan IC revenue (including design, manufacturing, packaging and testing) totaled NTD235.8b, down 3% on-year, with NT$57.5b in design, down 4.8%, NT$127.7b in manufacturing, a 6.7% decline, NT$36.1b in packaging (domestic and foreign-invested), an 8.1% growth, and NT$14.5b in testing, up 17.9%. Overall, compared to the US6.2b, a 12.8% on-year growth of the worldwide IC industry, Taiwan IC industry did not perform well, with only a –8% to 18% growth rates in different sectors.

The WSTS data showed that contributors to the worldwide IC revenue growth (YoY) include US$1.4b in Microelectronics, an 11.8% increase, US$1.5b in Memory, a 14.6% growth, and a US$3.5b in the MOS Logic, with the highest growth rate of 32.6%. Revenue growth of MPU came mainly from the increased PC demand, fast growth of automative MCU, up 32.2% on-year, and 26.6% growth of IC card MCU. DSP, used to be a hot product, grew only by 6.2% in Q1.

Communication IC, the most shining one in logic products, grew by US$1.37b, a 93.5% up on-year. Handsets chip grew 63.6% on-year, and short distance wireless chip grew by 930%, showing that Bluetooth and short distance wireless communication ICs are growing rapidly. Thanks to the hot sale of MP3, logic ICs used in Audio/Video grew 55.8%. These have made logic ICs the best performer in all product categories.

On memory side, DRAM and NAND Flash grew by 26.2% and 24.5%, respectively. While NOR Flash dropped by 10.9%. The strong demand for MP3 and its peripheral applications has helped drive the growth of NAND Flash.

Design
Most companies suffered from revenue decline due to inventory adjustments and soft demand for end products in Q1 2005. However, stronger demand for LCD monitor and LCD TV has boosted LCD driver IC revenue to grow by roughly 20% on-year. Higher base of Q4 2004 and fewer working days in February has depressed quarterly growth of PC chipsets. A better situation is expected from March after AMD’s mass production of its new K8 chipsets. It is also predicted that Taiwan IC design revenue could be rising in the second half after three quarters’ inventory adjustments. Q1 Taiwan IC design revenue estimated NT$57.5b, a 13.5% drop from the previous quarter, and a 4.8% decrease from Q1 2004.

Manufacturing
Wafer shipments and utilization rates of foundries kept on declining in Q1 2005 due to the on-going inventory adjustments of their clients. Revenue of TSMC and UMC dropped about 20% from previous quarter. The second tier foundries suffered even more. Fortunately, strong demand for LCD driver ICs and analog ICs has gradually boosted revenue of second tier foundries in high-pressure process, despite of the fast declining ASP. Totally, Taiwan foundry revenue estimated NT$80.2b, a 7.9% decline on-year, and an 18.5% down from the previous quarter.

The breakthrough of multinationals into 0.11μm has boosted memory supply. Intel’s delay on launching its new chipsets, deferred DDR2 transition effect, plus the low season effect, have deteriorated DRAM price and Memory revenue in Q1. Overall, Taiwan IC manufacturing revenue totaled NT$127.7b, a 6.7% decrease on-year, and an 18.1% down from Q4 2004.

Packaging and Testing
Packaging and Testing revenue, especially Testing, did not drop as dramatic as other sectors due to the on-going outsourcing of foundries and IDMs, and higher testing demand for DDR2. Packaging revenue, in general, declined from Q4 2004 due to the traditional low season and the transition of IT products. However, it still enjoyed a slight on-year growth. Totally, Packaging revenue reached NT$34.1b, a 2.1% up from Q1 2004, and a 20.2% decline from Q4 2004. Testing revenue totaled NT$16b, a 30.1% increase on-year, and a 5.9% down from the previous quarter.

Taiwan IC revenue fell behind the worldwide market in Q1 2005. Driving forces for the worldwide growth include DRAM, NAND Flash, MPU, electronic components for cars, communication ICs, and consumer ICs such as audio/video chips. Taiwan companies should seek solutions for the hot sale chips in order to grab these markets. Taiwan DRAM revenue also fell behind the worldwide level due to slow in capacity development. Furthermore, intense price competition and declining utilization rate of foundries also dragged the Taiwan IC revenue.

Prospect
Taiwan IC revenue in Q2 2005 is expected to reach NT$254.7b, an 8% growth from Q1. Driven by the inventory level-off and hot sale of consumer electronics, IC design revenue is expected to grow in Q2. Manufacturing revenue, as a whole, is predicted to increase slightly due to strong demand for high-pressure process driven by the hot sale of LCD. Although capacity is expected to rise, memory revenue could grow only a bit due to the price plummet. Packaging and Testing revenue is forecasted to decline slightly due to seasoning effect and inventory adjustments of clients. However, packaging and testing utilization rate would be increasing from Q2, and capacity is predicted to be intense or short in the second half due to the outsourcing of multinational IDMs and the increased testing demand driven by the transition from DRAM to DDR2.

Major Indices of Taiwan IC Industry
(NTD: Billion)

2004Q3 2004Q4 2004 2005Q1 2005Q2e* 2005 e* 05Q1/04Q1 05Q1/04Q4
Industry revenue 296.9 282.1 1,099 235.8 254.7 1,133.3
-3.0% -16.4%
 IC Fabless 68.4 66.5 260.8 57.5 655 272
-4.8% -13.5%
 IC Mfg. 171.0 155.9 623.9 127.7 135.6 636.6
-6.7% -18.1%
  Foundry 111.5 98.4 398.5 80.2 843 407.6
-7.9% -18.5%
 IC Packaging 42.8 42.7 156.6 36.1 381 161.3
8.1% -15.5%
Domestic Pkg. 35.1 36.3 131.2 30.8 320 135.4
9.2% -15.2%
 IC Testing 14.6 17.0 57.7 14.5 155 634
17.9% -14.7%

Source: TSIA Q1 2005 Survey, TSIA project, IEK/ITRI
Note: p*-preliminary; e*-estimate

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