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May 29, 2017

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Local semiconductor companies upbeat about H2 market outlook

TAIPEI--Semiconductor suppliers in Taiwan have an optimistic view of the market in the second half, especially with the global integrated circuit business entering its peak season in the third quarter.

Solid demand for smartphones and tablet computers is expected to continue to serve as a catalyst for sales growth for these IC suppliers in the second half, they said.

One of them is United Microelectronics Corp. (UMC), the second largest wafer foundry operator in Taiwan. Chief Financial Officer Chitung Liu said UMC's production utilization has risen to nearly 90 percent in the second quarter from 81 percent in the first quarter.

Liu said that with the peak season approaching, he expects the utilization rate in the third quarter to rise even higher on strong demand.

UMC, which has benefited from a technical rebound in the current quarter after inventory adjustments in the previous two quarters, is expected to post a sequential 11-13 percent increase in sales and shipments in the third quarter, analysts said.

In May, UMC's consolidated sales hit a record high of NT$11.93 billion (US$398 million), up 3.48 percent from a month earlier and up 9.82 percent from a year earlier.

UMC's sales growth in May offered evidence that the global semiconductor sector is gaining strength in the current quarter, analysts said, adding that UMC's sales growth momentum is expected to continue into the coming quarter.

Because UMC's 8-inch wafer production is fully booked, Liu said his company was not ruling out any opportunity to acquire additional production capacity to cope with strong demand.

UMC rival Taiwan Semiconductor Manufacturing Co. (TSMC), the largest contract chip maker in Taiwan and in the world, said shipments of chips made on its 20 nanometer process are expected to pick up in the second half as the global IC industry surges higher.

The increase in shipments of chips using the 20nm process could push TSMC's sales higher month by month in the second half, the company said.

TSMC launched mass production of 20nm chips in January and is scheduled to start commercial production of the more advanced 16nm process in January 2015.

Integrated circuit designer MediaTek Inc. has urged TSMC to allocate more capacity to meet the fabless IC firm's growing orders for 4G chips. TSMC is one of MediaTek's major contract chip manufacturing services providers.

Meanwhile, Hermes Microvision Inc., a leading semiconductor inspection tool and equipment supplier in Taiwan, said its order backlog will extend to the end of the year because many of its clients have increased their capital expenditure to boost capacity.

TSMC, one of Hermes' major clients, is expected to spend about US$10 billion on capital goods this year, up from some US$9.6 billion spent a year ago.

Hermes has stuck to its forecast that its sales in the second quarter will be about 50 percent higher than in the first quarter, and it expected sales growth momentum to accelerate quarter by quarter over the next six months.

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