TSMC sees early 2010 demand pick up

TSMC, the world’s largest foundry for silicon wafers, saw a modest rise in sales from the fourth quarter of last year to the first quarter of 2010 rather than the expected post-Christmas dip.

CFO Lora Ho said: “Contrary to expectations, first quarter revenues and wafer shipments slightly increased.” The growth was driven by communications and consumer products, coupled with stronger demand on the recently introduced 40nm process, helped by improving yields.

Morris Chang, chairman and CEO of TSMC, said yields on the 40nm are now as good or better than those encountered on the previous 65nm process at the same stage of its development. In the first quarter, the foundry sold $411m worth of wafers to customers made using the 40nm process – revenues from the 65nm process passed the $400m point two years ago.

“Combined revenue from 40nm and 65nm processes accounted for 41 per cent of total wafer sales,” said Ho.

Expecting growth in the semiconductor business of 22 per cent this year, revised upwards from an earlier projection of 18 per cent, and 7 per cent next year, TSMC is accelerating spending on capacity expansion. The company expects to increase 12in production by 35 per cent by the end of the year, spending the majority of its capital expenditure budget in the first half of this year.

TSMC is expanding capacity at Fab 12 and Fab 14 almost to their peak production level of 100,000 wafers per month and has decided to start work on its third so-called gigafab, Fab 15, in Taichung in the middle of this year. The new fab will start wafer manufacture on the 40nm process, adding 28nm and 20nm and later processes as they mature. However, the fab shell will take at least a year to complete, Ho said, before the first equipment can be moved in.

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