TSMC: Semi Market Will Keep Growing, but at Slow Pace

Jul 6, 2010 15:19 Jyunichi Ooshita, Nikkei Electronics

TSMC Japan Ltd, the Japanese unit of Taiwan Semiconductor Manufacturing Co Ltd (TSMC), announced its long-term perspective on the semiconductor market at a press conference in Tokyo, July 1, 2010.

"In and after 2012, the market will slowly grow at an average yearly rate of 4.2%," said Makoto Onodera, president of TSMC Japan.

Though there are high hopes for emerging counties as new markets for semiconductors, average selling prices in those countries are low. Therefore, they will not restore the growth rate to double digits, TSMC Japan said.

TSMC expects that the year-on-year growth rate of the semiconductor market is 30% in 2010 and that the rate will decline to 7% in 2011 and less than 7% in 2012 and thereafter. The company cited the following four reasons for the decline.

First, applications whose demand for semiconductors is expected to expand are consumer products, over which price competition is severe. Second, in emerging countries, which are expected to become new markets, average selling prices of electronic devices are low.

Third, the ratio of semiconductor component costs to the costs of electronic devices (BOM: bill of material) is a little more than 20%, and it is not expected to increase any more. Fourth, the pace of downscaling predicted by the Moore's Law is expected to be slower in the coming years.

Furthermore, TSMC Japan said that semiconductor makers including foundries will face serious challenges in terms of both technologies and costs. As for the technological challenges, it will become difficult to scale down the gate lengths of transistors regardless of advance in technology generation. Also, as technology generation advances, leak current increases, keeping increasing the power consumption per area of a semiconductor chip.

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