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To: Michael Sphar who wrote (98)	9/23/1998 2:39:00 PM
From: Michael Sphar	Respond to of 105

TSMC still growing: A service of Semiconductor Business News, CMP Media Inc. Story posted 6:15 p.m. EDT/3:15 p.m. PDT, 9/22/98 TSMC pushes ahead with fab in south Taiwan science park By Sandy Chen TAIPEI, Taiwan -- As several chip makers here delayed wafer fab expansion plans while waiting for the dust to settle in this country's new science park, Taiwan Semiconductor Manufacturing Co. (TSMC) Ltd. continues to move full speed ahead with construction of a new chip-processing plant in Tainan. Hsinchu-based TSMC expects the new 8-inch wafer fab to move into the pre-production stage in the third quarter of 1999. It will be capable of processing 60,000 wafers a month. TMSC is proceeding in the southern Taiwan city of Tainan in spite of a series of mishaps in the new park, including flooding and drainage problems. Tainan itself also suffers from a lack of power and other problems with its infrastructure. These problems, coupled with a capacity-glut in the worldwide foundry business, led Taiwan's United Microelectronics Corp. (UMC) to delay its expansion plans last week (see Sept. 18 story. UMC's archrival, TSMC, is going in the opposite direction. "Our land [in Tainan] doesn't have drainage problem, because our land is located in a higher position,'' according to Yen-Chun Huang, a vice president at TSMC. ''The power situation will become stable in the first quarter of 1999. So, everything is running according to our schedule." Huang said the new Tainan plant, called Fab 6, will not have a significant contribution to TSMC's capacity in 1999. Next year, the increased capacity will mostly come from WaferTech, a newly-opened joint venture in Camus, Wash., between TSMC and several U.S. chip makers. WaferTech's 8-inch capacity will increase from 8,000 wafers a month by year's end, to 30,000 in 1999. In 1999, TSMC's total 8-inch capacity will increase to 200,000 wafers a month, from 160,000 units a month. In 1999, TSMC's total capital expenditure is forecasted to be $1.3 billion, compared to $930 million in 1998, according to Huang.

To: Michael Sphar who wrote (98)	9/23/1998 3:06:00 PM
From: Michael Sphar	Read Replies (1) \| Respond to of 105

Equipment makers continue to suffer: SEMI Index Show No Relief In Sight, Hits 3-Year Low (2:20 p.m. EDT, 9/23/98) By Jennifer L. Baljko Silicon Valley The semiconductor equipment industry continued to bear the brunt of the current market downturn last month, posting the lowest book-to-bill figure in more than three years. The ratio fell to 0.60 in August, according to Semiconductor Equipment and Materials International (SEMI), Mountain View, Calif. A book-to-bill of 0.60 means $60 in orders were received for each $100 worth of products shipped. Three-month average shipments last month dropped 21%, to $1.06 billion compared with last year. Sequentially, three-month average shipments fell 5%. Three-month average bookings plummeted 55.9%, to $632 million, and dropped 14.7% from July. "One has to look as far back as 1994 before previously seeing order levels this low," said Min Pang, an analyst at SG Cowen Securities Corp., San Francisco. "In assessing different leading indicators of recovery, we have found an upturn in total orders to give the best signal of fundamental improvement. Alas, this month's data offers no such indicator." August's figures were not too surprising given the continued problems that have been surfacing around the global chip market. For instance, fab utilization rates in Taiwan have averaged only about 50% on the back-end. And the ongoing merger activity in the semiconductor sector will create manufacturing efficiencies and affect short-term spending for equipment, Pang noted in his First Call report. Overall, total 1998 capital spending is likely to decline 30% to 35% from last year, down even further from previous projections of a 25% to 30% decrease, added Jay Deahna, an analyst at Morgan Stanley Dean Witter, San Francisco. The chip market, though, appears to have stabilized, which could help fuel a recovery in the equipment business. But not until late 1999, analysts said. "Computer sales are apparently strong heading into the fall season and Intel reported better than expected chip sales in the third quarter," said Dick Greene, an analyst with SEMI, Mountain View, Calif. "While the equipment market should also see a leveling, the prospects for recovery still appear to be at least twelve months off." Semiconductor equipment capital spending is expected to increase modestly next year as orders pick up in the first six months of 1999, Deahna said. But the health of the equipment industry in the first half of 1999 will be determined by the amount of growth seen later this year. "The magnitude of sequential revenue growth in the second half [of 1998] will determine whether or not global semiconductor capital spending is up or down next year," Deahna said.