Reuters
UPDATE - TSMC sees lower capital expenditure in 2005
Friday March 19, 1:41 am ET
(recasts, adds background)
TAIPEI, March 19 (Reuters) - TSMC (Taiwan:2330.TW - News; NYSE:TSM - News), the world's largest contract microchip maker, expects spending on new plant and equipment to fall by as much as half next year as it fears new plants being built in China may lead to over-capacity.
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Taiwan Semiconductor Manufacturing Co (TSMC) sees next year's capital expenditure budget falling to between $1 billion to $2 billion, company spokesman Tzeng Jinn-haw told Reuters on Friday.
The forecast was based on TSMC Chairman Morris Chang's estimate that the global semiconductor industry growth would slow to 10 percent in 2005 from 26 percent this year, Tzeng said.
"Since next year's market conditions are unclear, these figures are only based on assumptions," Tzeng said.
TSMC Chairman Morris Chang has said the company was preparing for a peak in the highly cyclical semiconductor industry in 2004.
Chang has said he was concerned that rapid expansion by Chinese rivals such as Semiconductor Manufacturing International Corp (HKSE:0981.HK - News) would lead to excess capacity in the future.
TSMC, one-fifth owned by the Netherlands' Philips Electronics NV (Amsterdam:PHG.AS - News), hiked its 2004 capital expenditure budget to $2 billion from $1.2 billion last year as the company rushed to install new production lines to meet a flood of new orders.
TSMC's announcement in October that it would significantly increase its 2004 budget boosted chip stocks globally as investors welcomed confirmation of a chip sector rebound.
TSMC and its arch-rival United Microelectronics Corp (UMC) (Taiwan:2303.TW - News; NYSE:UMC - News) are struggling to cope with resurgent demand for high-end chips used in products such as camera phones, as production capacity saw little growth during a record downturn in the semiconductor sector that began in 2001.
UMC and its subsidiaries are nearly tripling spending to US$2.12 billion from US$729 million last year.
As a quick fix, UMC also bought a plant from sister firm Silicon Integrated Systems (Taiwan:2363.TW - News) last month for 357 million shares, valued at T$11.46 billion by Friday's close.
TSMC's Taipei-listed shares added T$1.00, or 1.6 percent, to close at T$63.00 on Friday, while UMC gained 0.6 percent against a 0.41 percent rise
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