PCI Express adoption could boost TSMC in Q2, says report

The rebound is predicted to come after capacity utilization hits a low of 78 percent in the first quarter of 2005, the report said citing un-named senior executives at TSMC as sources.

In Feb. 2005 TSMC estimated its first quarter capacity utilization would stand at 78 percent, down from the preceding quarter's 88 percent but also said it expected to complete its inventory-backlog adjustment at the end of the first quarter, the report said. The report quoted un-named TSMC executives saying that the adoption of the PCI Express specification for personal computers is stimulating demand as it moves to the mainstream and computer makers build the specification into their equipment. In particular, graphics and peripheral logic chip set vendors Nvidia Corp. and ATI Technologies Inc. — two major TSMC customers — are expected to receive big orders for PCI Express compatible chips in the second quarter, the report said.

While the second quarter would appear to be getting rosier, at least for foundry chipmaker Taiwan Semiconductor Maufacturing Co. Ltd., many chip suppliers are becoming more cautious about the second-half of the year, the report said.

The accepted wisdom — or wishful thinking — was that the market would pick up in the second half of 2005 after an inventory correction in the first half. But so cautious have those chip suppliers become about the second half that they have been revising downwards their shipment goals for the year, the report said.