The contract chip manufacturing industry has experienced an early recovery in Q2, with an output amounting to NT$103.5 billion, having grown 13.2 percent over the previous quarter, according to a survey released by the Taiwan Semiconductor Industry Association (TSIA).

The Q3 output is likely to continue on an upward trend following decreases in inventory levels caused by the growing demand for personal computers, mobile phones and other consumer electronic products thanks to hot seasonal sales and outsourcing of orders for nanotech products reported by integrated device manufacturers, the report said.

The TSIA predicted that the Q3 output will surge 5.49 percent over the same period of the previous year.

As for Taiwanese-made IC products, the Q2 output value fell sharply, down 29.4 percent, to NT$64.3 billion from Q1, while the Q3 output is expected to top NT$85 billion, showing a substantial surge of 32.2 percent over the previous quarter due to a boost in DRAM makers' production capacity, advances in manufacturing techniques, and a rebound in product prices.

Taiwan is home to some of the world's most renowned contract chipmakers. Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) are the world's No. 1 and No. 2 foundries. The two firms, whose clients include some of the most famous multinational corporations in the world, are supported by a seamless supply management chain linking upstream IC design houses to downstream testing and packaging firms.

In fact, Taiwan has developed such a robust semiconductor industry, it is included in the "Two-Trillion, Two-Star" national development project.

Under the project, the government is seeking to help turn the IC and TFT-LCD industries into trillion-dollar sectors, while promoting the digital content and biotechnology industries as Taiwan's star industries.