By Mark LaPedus, SemiMD senior editor

Taiwan’s two foundry rivals — Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and United Microelectronics Corp. (UMC) — both see a slowdown in the IC market and uncertainty going forward.

TSMC and UMC separately reported lackluster results for the third quarter. TSMC, the world’s largest foundry vendor, Thursday (Oct. 27) cut its capital spending forecast for the second time this year, with spending expected to hit $7.3 billion in 2011. In July, TSMC cut its capital spending from $7.8 billion to $7.4 billion.

In 2012, “we plan to reduce our capital spending,” said Morris Chang, TSMC’s chairman and CEO, during a conference call to discuss the company’s third-quarter results.

Chang did not elaborate on TSMC’s capital spending plans for 2012, but he did say the IC market is in the midst of a slowdown and economic “uncertainties.”

He projected that the worldwide IC market would grow by a mere 1 percent in 2011, down from his previous forecast of 2 percent in April and 5 percent in January. The overall silicon foundry market is expected to grow by 4 percent in 2011, down from the previous forecast of 7 percent, he said.

In 2012, the IC market is expected to grow 3 percent to 5 percent. Despite the economic uncertainties, “TSMC’s position is stronger than ever,” he added.

On the technology front, Chang touted the company’s efforts in the 2.5D stacked era. Xilinx Inc. has begun shipping its previously-announced Virtex-7 2000T, a 2.5D stacked FPGA. The product is based on a 28nm process and a silicon interposer technology from TSMC.

TSMC said its 28nm process is in full production, following an announcement last week by ARM and TSMC that they have taped out the first 20nm ARM Cortex-A15 MPCore processor.

At a technology event this week, TSMC senior vice president S.Y. Chiang said TSMC’s finFET process roadmap is not set in stone, saying it is mulling plans to re-adjust the target date for the technology. TSMC has stated that it will move into finFET production at the 14nm node.  At that node, the silicon foundry giant plans to bring out its finFET process by the end of 2014, with “risk production” due out in 2015, according to its roadmap.

On the business front, TSMC announced consolidated revenue of NT$106.48 billion ($3.657 billion) and net income of NT$30.40 billion ($1.045 billion). Year-over-year, third quarter revenue decreased 5.1 percent while net income decreased 35.2 percent. Compared to the second quarter of 2011, third quarter 2011 results represent a 3.6 percent decrease in revenue, and a 15.5 percent decrease in net income. In U.S. dollars, third quarter revenue decreased 4.5 percent from the previous quarter and increased 4.0 percent year-over-year.

“The outlook of the global economic condition continues to weaken, which has impacted the demand for our wafers in the fourth quarter of 2011. Relative to the third quarter, all major segments are expected to decline, except for the communication segment, thanks to the strength in the demand for smartphones,” said Lora Ho, senior vice president and chief financial officer of TSMC.

For the fourth quarter, revenue is expected to be between NT$103 billion ($3.422 billion) and NT$105 billion ($3.494 billion).

Rival UMC, the world’s second largest foundry vendor, on Wednesday (Oct. 26) said revenue was NT$25.19 billion ($826.35 million) for the quarter, a 10.5 percent quarter-over-quarter decrease and a 22.9 percent drop from a year ago. Net income was NT$1.95 billion ($64.11 million) for the period, down 38.8 percent from the previous quarter and down 77.6 percent from a year ago.

Like TSMC’s Chang, Shih-Wei Sun, CEO of UMC, said the overall semiconductor industry is weak and the outlook is unclear. “We don’t have clear visibility” going forward in the market, Sun said in a conference call.

Since wafer shipments decreased and wafer capacity increased in Q3, UMC’s overall fab utilization rate for the quarter dropped to 74 percent. This utilization rate compares to 87 percent from the previous quarter and 99 percent from a year ago.

For the fourth quarter, wafer shipments are expected to fall by approximately 10 percent. Capacity utilization is projected to be in the mid to high 60 percent range. UMC’s capital spending budget is still approximately $1.8 billion.

For some time, UMC has been developing two 28nm processes. UMC’s 28HLP process is based on a traditional polysilicon gate-stack. The other process, 28HPM, is built around a high-k/metal-gate scheme. “Customer 28HLP product has entered pilot production, with 28HPM scheduled for pilot production in mid-2012,” Sun said.

In the conference call, Sun said UMC has taped-out its first 20nm test vehicle chip, without elaborating on the details.

Tags: Morris Chang, TSMC, UMC

This entry was posted on Thursday, October 27th, 2011 at 8:45 pm and is filed under News Stories. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.