Taiwan's wafer foundry industry output forecast to grow 8-10% in 2019

Taiwan's semiconductor industry set for more growth. (photo by Paolo Neo)

Taiwan's semiconductor industry set for more growth. (photo by Paolo Neo) (Wikimedia Commons photo)

The production value of Taiwan's wafer foundry industry is expected to grow 8-10 percent from a year earlier in 2019 due to manufacturers' efforts in developing high-end technology, according to the Market Intelligence & Consulting Institute (MIC).

The MIC, a research division of the Taipei-based government-sponsored Institute for Information Industry, said the expected 2019 growth rate will beat an estimated 6.4 percent for 2018.

In 2018, the production value of Taiwan's wafer foundry business is forecast to hit almost NT$1.2 trillion (US$39 billion), according to the MIC.

It said the local wafer foundry industry has taken the lead over its peers in the global market in the advanced 7 nanometer processor development, and such efforts are expected to help the industry secure orders for application processors from high-end smartphone brands, sophisticated graphics processing units as well as chips used in artificial intelligence.

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, has begun producing chips on the 7nm process. Its rival California-based Globalfoundries said earlier this week that it has given up a plan to pursue the 7nm process development, a move market analysts said will help TSMC reinforce its lead in the world market.

Currently, TSMC accounts for more than 50 percent of the global wafer foundry business.

The MIC said production of a wafer plant run by TSMC in Nanjing is expanding and United Microelectronics Corp. (UMC), a smaller Taiwanese rival of TSMC, is keen to extend its reach to automotive electronics applications, so Taiwan's wafer foundry industry overall will get a boost in 2019.

The MIC said the production value of the local integrated circuit design for 2018 is expected to hit NT$579.8 billion, up 6.2 percent from a year earlier, in reflection of rising demand for wireless communications devices and driver ICs for flat panel use.

As for the IC packaging and testing industry, the MIC said, the output is expected to grow 8.3 percent from a year earlier to total NT$474.9 billion in 2018 and growth will continue in 2019 to hit about 7 percent.

The MIC said the local IC packaging and testing business is expected to continue to benefit this year from rapid development of high performance computing devices, witnessing rising demand for high-end processes, while slower demand for handheld devices could cap growth in the industry's output to some extent.

Analysts said ASE Technology Holding Co., the world's largest IC packaging and testing services provider, is expected to post a 19-20 percent increase in sales for the third quarter of this year, with sales to hit NT$101.5 billion (US$3.30 billion), due to peak season effects. (By Jalen Chung and Frances Huang)