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Taiwan's IC design output forecast to fall over 1% in 2016

Taiwan's IC design output forecast to fall over 1% in 2016

Taiwan's integrated circuit design sector could be faced with continued weak global demand, and could see its production value fall further in 2016 by more than 1 percent, according to Taiwan-based Topology Research Institute (TRI).

The TRI cited a research report as saying that sales in smartphones, tablet computers and notebook computers could remain slow, which will continue to impose an adversary impact on the global IC design industry.

In addition, the Internet of Things (IoT) still need more time to develop so that demand from the IoT-related devices is unlikely to give a significant boost to the world's IC design business, the TRI said.

The IoT refers to devices of all types, such as security monitors, vacuum cleaners and mobile phones, connected to the Internet and to each other to create a more interconnected user experience.

As a result of the slow sales, output of Taiwan's IC design industry is expected to fall 1.4 percent from a year earlier in 2016 after an estimated 9.5 percent year-on-year fall in 2015, when production value of the business is expected to total US$15.46 billion.

For the global IC design industry, output is expected to fall 4.1 percent from a year earlier in 2016, the TRI said. In 2015, output of the world's IC design sector is forecast to fall 8.5 percent year-on-year to US$80.52 billion, the research group said.

The TRI said that more than half of the top 10 IC design houses in Taiwan are expected to record a fall in output in 2015, including the largest designer MediaTek Inc.

It added that escalating competition from China and a stronger U.S. dollar has eroded the IC design sector's pricing power, plunging chip prices by 15-20 percent.

The TRI said that it is likely that the global IC design sector will continue to consolidate through more acquisitions and mergers in 2016. Earlier this year, among the prominent acquisitions in the industry was the deal in which U.S.-based Avago Technologies Ltd. acquired its U.S. counterpart Broadcom Corp.

China's Tsinghua Unigroup, a high-tech group controlled by Chinese authorities, has repeatedly expressed interest in buying a stake in MediaTek, while MediaTek has said that it is open to any form of cooperation with Chinese investors.

Taiwan's government is mulling whether to conditionally allow Chinese investors to take a stake in a Taiwanese IC design house without allowing them to take a controlling stake in local IC firms. (By Jackson Chang and Frances Huang)

Updated : 2021-09-29 09:46 GMT+08:00