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Happy Days Ahead for Asian Chipmakers?

Posted by: Bruce Einhorn on April 29, 2008

TSMC chairman Morris Chang, hailed in Taiwan as the father of the island’s chip industry, is predicting more good times ahead for Asia’s chipmakers. Why? As the cost of building new semiconductor plants runs into the billions of dollars, more companies are outsourcing. Last week Chang, speaking at a conference in Hsinchu, Taiwan’s Silicon Valley, said that foundries – the chipmakers that produce semiconductors not for themselves but on a contract basis for companies that want to save money by having others do their production – will account for 40% of the industry sales by 2012, compared to 28% now. (Here’s the story from DigiTimes, the Taiwanese tech daily.)

TSMC and its crosstown rival, UMC, are both foundries. So too is Singapore’s top chipmaker, Chartered Semiconductor. And some of the chipmakers in Shanghai that have dreams of joining the big leagues – most notably SMIC – have big foundry businesses, too. But not all foundries are created equal: Many have struggled to make money even as TSMC has continued to flourish. Today the company announced profit for the first quarter had soared 49% to $924 million, on sales of $2.8 billion. And as Bloomberg reports, “Taiwan Semiconductor’s revenue for the first-quarter was more than three times that of nearest rival United Microelectronics Corp.”

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