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IC firms set for mixed H2 performances

With the second half expected to be slow this year, semiconductor firms are set to give mixed performances over the final six months of 2012, experts said.

The second half is traditionally a busy season, yet recent remarks by Taiwan's leading contract chip-makers, namely Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC), suggest things will be different this year.

Sun Shih-wei, chief executive officer of UMC, said demands are expected to be slow in the second half, given the economic situation faced by Taiwan during this period compared to the same time in 2011.

TSMC, meanwhile, predicted third quarter sales would fall between NT$136 billion and NT$138 billion, a rise of 7 percent from the second quarter. While the figure is sanguine, the cutting-edge 28-nanometer technology will contribute about 80 percent of the total.

Without taking 28-nm into consideration, TSMC's traditional 40-nm and 65-nm sales in the current quarter would just grow 1 to 2 percent from Q2, lower than the same period in previous years.

TSMC and UMC are expected to give disparate performances. While TSMC's overall sales would grow seven percent from the second quarter, those from UMC would increase merely 2 to 3 percent, about half of TSMC's growth margin.

In TSMC's recent investors' meeting, CEO and Chairman Morris Chang expressed conservatism about the fourth quarter, saying IC operators will be faced with an inventory adjustment from the fourth to first quarter next year.

According to analysts, UMC will feel greater inventory adjustment pressures than TSMC. Yet Sun of UMC sounded a tone of confidence, saying things aren't as bad as they seem, given that a variety of new products will roll out in the second half including Windows 8 and the iPhone 5.

Separately, 28-nm's contributions to sales will go up to 5 percent, while 40-nm will rise to 15 percent — developments that give UMC reasons to be optimistic. Whether these positive factors will offset inventory adjustment pressures remains to be seen.

Faraday Technology Corp., an IC designer, has expressed optimism thanks to strong demand from the consumer electronics, safety control and smart grid sectors. The firm expects to have third quarter sales growth of 7 to 9 percent on a quarter-on-quarter basis, with sales set to break records for three quarters in a row.

Other IC designers, including MediaTek and Realtek, will hold their investors' meetings this week, and all eyes are watching what they will say about their performances in the third quarter.

Realtek had recently expressed conservatism about the July-September period, as strong demands for tablet PCs and Wi-Fi devices were offset by weakness in the PC sector.

As for MediaTek, analysts are upbeat about the IC designer on expectations smart phone chips will ship 25 million to 27 million sets in the third quarter, where sales are expected to grow 18 percent compared to the second quarter.

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