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To: Manx who wrote (623)	3/29/2000 1:28:00 PM
From: tech101	Read Replies (1) \| Respond to of 1056

TSMC aims to overtake Intel, Hitachi, NEC in wafer volumes next year By J. Robert Lineback Semiconductor Business News (03/29/00, 12:43:13 PM EDT) HSINCHU, Taiwan -- Taiwan Semiconductor Manufacturing Co. Ltd. plans to invest $3.6 billion in 2001 to add more wafer-processing capacity following an astounding increase of 167% in capital spending this year, said TSMC officials today during a briefing with journalists and analysts here. In 2000, TSMC has set capital investments at about $4.4 billion compared to $1.65 billion in 1999--a hike that puts the pure-play silicon foundry supplier near Intel Corp. in capital spending this year. "At the moment, we have placed the 2001 figure at $3.6 billion, but that could be adjusted," said TSMC president Fang Churng Tseng. A key factor is the current forecast for some softness in the chip markets during the 2002-2003 timeframe. TSMC's top management continues to poll the industry about the prospects of slower growth or flatness in 2002 or 2003, but the company's chairman, Morris Chang, is confident that the silicon foundry sector will continue to show growth even if the rest of the chip business slips into a slump in the next couple of years. "The consensus now shows 70% believing that next year will be good, but after that the percentage drops off to 50% still thinking that 2002 will be also good," said Chang, responding to questions during the briefing. "And 50% is not very high. So 2002 is on the uncertain side [of solid growth conditions]." But that uncertainty isn't slowing TSMC down. During the current boom times, the world's largest silicon foundry supplier is making a strong bid to become the world's highest-volume chip maker, surpassing Intel, Hitachi, and NEC to reach a three-way tie for the top spot with Toshiba and Hyundai at 4.7 million eight-inch equivalent wafers in 2001. TSMC aims to grow its fab capacity by 38% to 4.7 million eight-inch equivalent wafers in 2001, or 7% of the world's total 63 million wafers next year. This year, TSMC expects to grow its output by 79% to 3.4 million wafers in 2000 compared to nearly 1.9 million in 1999. In addition to its huge capital investments this year, TSMC is completing acquisitions of Worldwide Semiconductor Manufacturing Corp. (WSMC) and majority ownership of the TSMC-Acer Semiconductor Manufacturing Corp. joint venture. Chang said TSMC was accelerating its capacity expansions partly because of strong market conditions, but also to make up for lost ground in the past couple of years. The TSMC chief executive officer said the goal has been to maintain a 25% "linear" increase in wafer-processing capacity each year, but his company opted to cut investments by 14.6% in 1998 when the chip industry fell back into a recession. "For quiet a few years we expanded at 25% but in 1998 we modified the percent [from the linear capital expansion target], and in 1999, we quickly discovered our error," Chang said. During that time TSMC's rival, United Microelectronics Corp. of Hsinchu, gained market share and closed the revenue gap between itself and TSMC. But now, Chang believes TSMC has not only recovered its capacity expansion momentum but it is ready to leap over of a number of larger chip makers. "Looking forward [in the next couple of years] we will be focused on 30-to-40% increase in capacity and then return to the 25% increase," he said, summarizing TSMC's expansion plans for the next four or five years. To help fund the growth acceleration, TSMC is considering a new equity offering, which would be its first such move to fund new capacity since the company went public in Taiwan six years ago. "At this point, we have gone to $5 billion [in projected revenues this year] without going to the market for new equity funding," he said. TSMC officials would not comment further on any possible equity funding or stock offering.