More signs of slowdown in chip industry

There are more signs of a slowdown in the global chip industry.

Eyeing Downturn, Chip Makers Trim Equipment Buying
The semiconductor industry is showing the first signs of slowing growth, trimming purchases of raw materials and production equipment as demand slows, industry executives and analysts said on Tuesday.

Taiwan's contract microchip makers...are beginning to ease production and may not operate at full capacity in the fourth quarter, said a raw materials supplier. "Companies should be reacting to Christmas demand by August, but they have not been aggressive," said a top executive of a company supplying raw materials to Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC), the world's top contract microchip makers. "Wafer starts are slowing down," he said...

Top contract microchip maker TSMC and its main competitor UMC have posted record high revenues in the past several months as their plants run at full throttle. But the executive said he expected TSMC's capacity utilization to drop to 95 percent in the fourth quarter, while UMC would drop to 90 percent...

iSuppli expects second-half global semiconductor revenues to expand 20 percent from the year-ago period, slowing from 30 percent growth in the first six months before eventually easing to 11 percent growth in 2005.

Semiconductor Equipment and Materials International (SEMI), a trade association of U.S. manufacturers of chipmaking gear, said monthly U.S. bookings of equipment had flattened out to around US$1.6 billion in the last three months.

In fact, orders for equipment used to produce microchips fell to US$1.52 billion in August, down 5 percent from July, according to Semiconductor Equipment and Materials International.

However, George Cwynar, chief executive of memory-chip specialist Mosaid Technologies, told the company's annual meeting on Friday that he is anticipating its key markets to grow at a slower pace in the coming quarters but a downturn in the industry won't come until 2006 (see report).