Taiwan IC industry output expected to grow 0.4% in Q2

Taipei--The production value of Taiwan's integrated circuit industry, which makes IC products for a wide range of electronic devices including computers, is estimated to grow only 0.4 percent in the second quarter of this year, reflecting the continued weakness of the local IC manufacturing sector, according to a government-sponsored research institute.

The Industrial Technology Research Institute's Industrial Economics and Knowledge Center (IEK) said that the IC manufacturing segment, which accounts for more than 50 percent of the IC industry's total production value, is expected to see its output for the second quarter falling further by 6.4 percent sequentially to NT$300.4 billion (US$9.95 billion), after an 11 percent sequential fall in the first quarter.

As a result, the second quarter output of the entire IC industry in Taiwan is expected to grow at a slow pace of 0.4 percent from the first quarter to NT$573.9 billion, but the growth will reverse a more than 11 percent sequential drop in the January-March period, IEK said.

The cautious forecast for the IC manufacturing segment echoed the guidance given by several industry giants, including Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the world's largest contract chip maker, and smaller rival United Microelectronics Corp. (UMC,??) for the second quarter.

TSMC said in mid-April that slow season effects will continue to impact its shipments at a time of inventory adjustments so its consolidated sales for the three-month period could fall 8-9 percent from the first quarter.

For its part, UMC, the second largest contract chip maker in Taiwan, said that its sales for the April-June period are likely to stay flat from a quarter earlier before the impact from inventory adjustments fades.

However, the IEK said, the output of the IC design segment, the second largest sub-segment in the local IC business, is expected to grow 10.2 percent quarter-on-quarter to NT$154 billion in the second quarter, helping to stabilize the entire industry.

MediaTek Inc. (???), the largest IC design house in Taiwan, has forecast that its consolidated sales for the second quarter will grow by up to 8 percent from a quarter earlier.

As for the IC packaging segment, it is expected to see its production value rise 7.8 percent sequentially to NT$83 billion in the second quarter.

The output of the IC testing segment, meanwhile, will likely rise 8 percent from a quarter earlier to NT$36.5 billion, the IEK said.

In the first quarter, the production value of Taiwan's IC sector fell 11.3 percent from the fourth quarter of 2016 to NT$571.4 billion, the IEK data showed.

The output of the IC manufacturing segment for the first quarter totaled NT$320.8 billion, down 11 percent from a quarter earlier, while the IC design segment reported a 12.5 percent sequential drop in output, which hit NT$139.8 billion, the IEK said.

It said that the production value of the IC packaging and testing segments fell 10.3 percent and 11.1 percent, respectively, to NT$77.0 billion and NT$33.8 billion in the first quarter.

Source: Focus Taiwan News Channel