October 9, 2009 – Top global foundries TSMC and UMC saw September sales go in different directions in September, but the market is bracing for what might be slower times in the near future.
Top global foundry Taiwan Semiconductor Manufacturing Co. (TSMC) said revenues in September were down about 3% from August to about $870M, and basically flat compared with a year ago. Through January TSMC says sales were roughly $6.13B, down about -24% from the same period in 2008. For the third quarter, TSMC says sales rose by about 20% vs. 2Q09.
Rival UMC, meanwhile, showed better in September: M/M sales growth of about 5% (to ~$288M), and Y/Y growth of more than 18%, to its highest level in nearly two years, attributed mainly to 65nm business from customers including nVidia and AMD/ATI. UMC’s YTD sales totaled about $1.89B, off -18% from last year’s pace; 3Q sales rose 21%. Illustrating its brisk business, UMC also recently said it would increase capacity and migrate to newer process nodes at its 300mm/65nm-55nm, 31,000 wafers/month Fab 12i in Singapore, moving to 45-40nm production but not giving specifics about the new output capacity.
But looking ahead to 4Q, there are some concerns. Merrill Lynch projects a 2% sequential decline in sales in 4Q, for example. "If we all know sales might slow in the fourth quarter and even the first quarter next year, there won’t be too much upside for tech shares, including foundries," said Tom Tang, a VP at Taiwan’s Masterlink Investment Advisory, cited by Reuters.
And even before the earnings reports, UBS cut its ratings on TSMC and UMC, as analyst Jonah Cheng says that despite a bump-up from Chinese orders during its National Day analyst Jonah Cheng, there are still very real questions about demand. "We think it unlikely we shall see further upside surprise as the market expectation is already high for PC and handset demand," and that 10% or even 20% sales declines in 1Q10 are likely — vs. historically seasonal 1% declines in year-opening business.