Taiwan's struggling chipmakers are expected to further slash capital expenditures (CAPEX) for 2009.

Taiwan Semiconductor Manufacturing Co. (TSMC) will cut its 2009 outlay by 30-40 per cent, while United Microelectronics Corp (UMC) could reduce capital expense by close to 60 per cent. The average capacity utilisation ratio of the two foundries has plummeted to 50-55 percent in the fourth quarter of 2008, compared to a 100 per cent peak in 2007.

In addition, DRAM manufacturers, including PSC, Promos and Nanya are expected to lower their spending by at least half. Meanwhile, Taiwanese chip testing and packaging facilities have suspended expansion plans for 2009, as projections indicate a 50 per cent decline of average capacity utilisation rate during the first quarter of 2009.

Gartner estimates that total spending by chipmakers worldwide will shrink shrink 34 per cent to US$30 billion in 2009, with only a moderate increase expected by 2010. 2008 spending hovered at US$46 billion, which represented an annual loss of 27 per cent.

As IT Examiner previously reported, Nanya Technology recently announced an aggregate loss of NT$24.8 billion (US$751 million) for the first three quarters. The Taiwanese-based company is currently seeking to obtain a government bailout package that offers lower-interest rates to improve the performance of its operating capital. However, Nanya sposkesperson PL Pai noted that an application had yet to be officially submitted as the firm maintained sufficient funds for the interim.

Nevertheless, Nanya posted a debt/asset ratio of 72 per cent, with a current ratio of 82 and quick ratio at 51 per cent. In addition, the company's cash position plunged to NT$192 million ($5.8 million) and its long-term shareholdings in other companies were valued about NT$19.9 billion ($605 million). The corporation's short-term and long-term debt was holding steady at NT$70 million ($2.1 million) and NT$9.3 billion ($281 million).

In addition, Nanya confirmed a 20 per cent memory production cut for the first quarter of 2009.

"We will cut output to a similar level as we did in the current quarter," explained VP Pai Pei-Lin. However, Pai denied rumours propagated by Dramexchange that the company would halt production at one factory during the month of January.

Pei-lin also blamed low-end devices such as the Eee PC and Netbook for negatively affecting sales.

"The more these gadgets sell, the worse off the DRAM industry becomes," said Pei-lin. X

Check Out
CENS