Taiwan issues final quake damage estimates as wafer demand escalates
By Mark Hachman
Electronic Buyers' News
(10/20/99, 10:39:59 AM EDT)
Taiwan's major foundries confirmed they lost about two weeks of production output from last month's earthquake, but said they are aggressively ramping manufacturing capacity to anticipate continued demand.
A previously-scheduled industry event hosted by the China External Trade Development Council (CETRA) took on new meaning as foundry executives today provided their final post-quake production estimates. The island's leading foundry, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) confirmed it lost two to three weeks of production, while rival, United Microelectronics Corp. (UMC), said it suffered only about a 10 to 12 days of lost production.
"I think the recovery was tremendous," said Magnus Ryde, president of TSMC USA, San Jose. "I think the ability to get the fabs up and running after the quake was quite remarkable, and I think our customers will support that."
Taiwan is still experiencing noticeable aftershocks, even weeks after the quake, attendees said. Taiwan's Institute of Economic Research said that the quake, estimated at 7.3 on the Richter scale, cut 0.1% out of the region's GNP. Hsinchu's Science Park suffered an estimated $240 million in damages, while losses to the semiconductor industry stand at about $300 million.
But the disaster also fostered a sense of community, both at the corporate and personal level. Startup foundry Worldwide Semiconductor Manufacturing Corp., Hsinchu, for example, said its competitors turned downright neighborly following the temblor. "After the quake, we lost a lost of quartz," said Richard Chang, WSMC's president, referring to the quartz linings used in the foundry ovens. "But UMC had spares. Immediately, we exchanged." Nan Ya Technology Corp., a DRAM manufacturer, also loaned access to a stepper after WSMC lost power, Chang added.
Foundry manufacturers presented their final estimates of the quake's toll. Ryde said TSMC lost 80,000 8-in. wafer equivalents, of which about 28,000 were lost in the midst of the manufacturing process. The production loss was concentrated at TSMC's Hsinchu fabs, closest to the quake's epicenter. Arthur Kuo, director at UMC, also based in Hsinchu, estimated that in total his company lost about 53,000 to 64,000 wafers, including about 16,000 in-process wafers. WSMC lost 10,000 of the 100,000 wafers it expects to produce this year, "a significant amount," Chang noted.
On the other hand, foundry executives said they had noted a sizable increase in demand as early as this past January, and had begun ramping capacity to compensate. Last December, TSMC forecasted 40% more demand in 1999 than in 1998, and the company planned a 7% capacity expansion, Ryde said. By July, estimated demand had doubled to more than 80%, and TSMC is now ramping capacity from 1.2 million wafers in 1998, to 1.9 million 8-in. wafers in 1999, and 2.7 million in 2000.
Overall, capital equipment manufacturer Applied Materials Inc. anticipates that by 2001 Taiwan will begin to surpass the $15 billion the U.S. is anticipated to spend in capital equipment. Part of the reason is the rise in foundry-dependent fabless semiconductor companies. Market research firm Dataquest Inc. anticipates that the fabless sector will grow from 5.7% of 1998 sales to 8% in 2002.
"Next year, we anticipate greater demand than supply," Ryde said. "There will be shortages next year, so the current demand picture looks very strong for next year. There's a fair number of assumptions around that. First, the significant impact on memory prices has not been fully comprehended, as well as the impact on our customers. I would imagine there will be price increases in the industry...although maybe the constant price erosion on microprocessors will stop."
TSMC's Fab 6 in Tainan will begin producing finished wafers in February 2000, with an estimated run rate of 30,000 per month by the end of the year. "Two weeks from today, we will be running at our pre-quake status-105% of our rated output," Ryde said.
Over half of TSMC's 1999 capacity will be at less than 0.35-micron linewidths, and about 50% of the company's 2000 capacity will be at 0.25-micron, Ryde said.
UMC's Kuo and WSMC's Chang provided fewer details, but also predicted similarly rosy forecasts for the semiconductor industry. UMC will produce 1.7 million 8-in. equivalents in 1999, 2.4 million in 2000, and 3 million in 2001, Kuo said. WSMC was ramping toward 25,000 wafers per month in December, although that plan has been delayed by about a month because of the quake's impact, Chang said.
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