The rise of New Chip Order in Asia
West flocks East
Taiwanese and Chinese companies are likely to be the only chip makers significantly increasing investment this year, according to VLSI Research Inc, which said that western manufacturers are moving more production to independent foundry operators such as Taiwan Semiconductor Manufacturing Co (TSMC) rather than building facilities of their own.
VLSI Research said it expects Taiwanese chip makers to increase spending 53% to $6.4bn this year, whilst spending in China, Singapore and Malaysia will grow 52% to $6.1bn, with 90% of that being spent by Chinese chip makers.
Most of this spending will be done by the independent foundries, led by TSMC itself which plans to increase its investments 13.6% to $2.5bn this year as it prepares for an anticipated hike in demand in the second half. TSMC's biggest rival, United Microelectronics Corp (UMC) has also announced expanded investment plans, and will spend $1.6bn this year, and third-ranked foundry operator, Singapore-based Chartered Semiconductor Manufacturing Ltd has announced a 25% spending hike to $500m.
The ongoing investment in these Pacific Rim markets consolidates Asia's central role in the semiconductor industry. The region, including Japan and South Korea, will invest $21.4bn on chip making this year, VLSI Research said, accounting for 54.4% of global investment in the industry.
However, within the region, the industry's pecking order is certainly shifting. In Japan, the major electronics conglomerates that were burnt last year by plummeting chip demand, have scrambled to limit their exposure to a market they believe will become increasingly commoditized, and are likely to cut chip foundry spending 43% to $6.2bn this year, VLSI Research said.
South Korea is expected to see chip investment slip 17% to $2.8bn. However, the country's biggest players are not contributing to this shortfall. Samsung Electronics Co, which is still the world's biggest DRAM maker, said it plans to increase investment 60% to this year to $3.2bn, and Hynix Semiconductor Inc, despite its parlous financial condition, plans a near four-fold investment hike to $1bn.
VLSI said that North America continues to be the biggest investor in chip making, but that this year spending in the region will slip roughly 10% to $10bn.
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