Q3 chip production up despite downturn

More chip-making equipment effectively stood idle during Q3 2004 than Q2 as worldwide capacity utilisation rates fell, the Semiconductor International Capacity Statistics (SICAS) organisation reported this week.

But it offered a sign that the downturn may not be as bad as the utilisation figures suggest: since so much of the un-utilised plant comprised new production lines, even as overall utilisation rates fell, chip production was up.

According to SICAS, industry-wide capacity utilisation hit 92.7 per cent in Q3, down on Q2's 95.4 per cent and Q1's figure, 93.4 per cent. By contrast, Q3 2003's utilisation was just 85.9 per cent.

Despite the decline in utilisation, production - measured in the number of wafers entering the manufacturing process - was up 0.7 percentage points on Q2 and up 13.6 per cent on Q3 2003. The discrepancy arises from a 10.6 per cent sequential increase in 300mm wafer production capacity, pushing 300mm capacity utilisation down to 89.9 per cent from 95.7 per cent in Q2 and 92.1 per cent in Q1.

Chip foundries had a bumper Q3 - as witnessed by TSMC and UMC's Q3 results - with utilisation rates down from 99.4 per cent in Q2 to 97.7 per cent in Q3, but still well above the industry average. The equivalent figure for Q1 was 98.7 per cent.

During Q3, foundry production was up 8.2 per cent on Q2 and 41.9 per cent on Q3 2003. Above-average foundry performance suggests a much bigger drop in production at chip designer-manufacturers - aka integrated device manufacturers (IDMs), such as Intel, Samsung and co. The same goes for capacity utilisation.

TSMC and UMC, the world's two largest foundries, have both warned that utilisation rates will fall during Q4 - by up to 20 per cent, TSMC reckons. By contrast, IDMs should see less of a decline in Q4, since they're better able to balance production across quarters because manufacturing is slightly less dependent on direct customer demand than is the case with foundries. ®

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