
Softening demand coupled to the need for an IC inventory correction in the third quarter of 2011, has meant leading foundry, TSMC has tweaked downwards by 5% its capital expenditure plans for the full year. Instead of spending approximately US$7.8 billion, TSMC now expects to spend in the region of US$7.4 billion. TSMC said in a conference call that its 28nm ramp had experienced delays due to customers deferring migration of chips to the next node due to the global economic conditions, rather than due to any fabrication issues.
Capital expenditures for TSMC on a consolidated basis totalled US$2.25 billion in 2Q11, while total capital expenditures in the first half of 2011 had reached US$5.03 billion. TSMC said that capex plans for 2012 were still being planned.
According to Morris Chang, fab utilization rates had sunk below 100% in the second quarter and wouldn’t recover until the fourth quarter, based on internal projections. However, Chang noted that the foundry expected a ‘significant recovery’ in utilization rates in the fourth quarter.
Chang also noted that 89 products had already been taped-out at the 28nm node all fully functioning and containing ‘satisfactory yields.’ The actual production ramp will take longer than expected due to the weakening macro-economic environment, as customers delay volume ramp plans until conditions can be seen to have improved.
TSMC has also revised down its capacity expansion plan for 2011. Current capacity plan calls for an overall increase of 17% to 13,248K 8-inch equivalent wafers, compared with 13,476K 8-inch equivalent wafers planned in the last quarter.
Under the current plan, 300mm wafer capacity will increase 30% in 2011. Total managed capacity was 3,318K 8-inch equivalent wafers in 2Q11, which increased by 8.3% from 3,063K in 1Q11.
TSMC managed capacity is expected to increase by 3.2% in 3Q11 to reach 3,423K 8-inch equivalent wafers.