Semiconductor market set to have record year

DQW News Bureau Taiwan, Oct 27

The worldwide semiconductor market is going to set a new world record for
2006 as the sales in June and July reached new record high, according to the

latest figures from the Semiconductor Industry Association (SIA). Worldwide
sales of semiconductors totaled $19.6 billion in June, up by more than nine
percent on June 2005, SIA said. This brought the Q2 total for 2006 to $58.9
billion, a slight decrease of 0.3 percent compared with Q1 of this year, but up
by 9.4 percent on the same period last year. For the first half of 2006, sales
have risen by eight percent compared with 2005. The semiconductor growth rate
continues to be strong across a broad range of end markets and geographic
regions, particularly Asia Pacific, which is up by more than 13 percent YoY, and
the US, where sales increased by almost 18 percent over last year.

Taiwan is expected to remain in the number two position for the immediate
future because of the strong growth in wafer foundries and packaging
subcontractors. China is growing too, as new fabs ramp up and integrated device
manufacturers add assembly and packaging capacity.

Growth Areas

With computer products representing more than 40 percent of all chip sales,
falling average selling prices and increased consumer spending maintained the
total revenues. The statistic showed that average selling price for a PC
declined by about seven percent YoY and the notebook PC declined by more than

18 percent compared with the same period in 2005. However, the sales in notebook
PCs are still proving to be the strongest growth area of the PC sector, while
the memory markets have benefited from increased prices and demand. Gartner Inc
recently raised its forecast for annual growth in the semiconductor market in
2006 to 10.6 percent from 9.5 percent, based on increased demand for PCs.

The growing demand enhanced by increasing semiconductor content for
electronic products such as PCs, digital consumer appliances and mobile

communications.

Local IC market

In 2005, Taiwan IC market reached NT$ 580.3 billion, a 3.8 percent increase
from the NT$558.9 billion of 2004. Because of self-reliance and exodus of many
IT hardware production facilities to China, the imported ICs have decreased 2.4
percent to NT$364.9 billion. In with expansion of wafer fabs in

China and the Taiwanese government's approval of local top IC wafer foundries
to setup their old 8-inch or smaller in China, the exported ICs to Taiwan have
decreased 3.6 percent to NT$530.8 billion.

Major driving forces were the increased shipments of down-stream PCs, DRAM
modules, Internet and communication products, LCD monitors, etc. Last year,
Taiwan IC market comprised 20.4 percent of the Asia-Pacific market from 22.2
percent in 2004, 9.5 percent of the worldwide IC market, lowered in 2004 by 9.4
percent, and eight percent of the worldwide semiconductor market, slight
improvement in 2004 with 7.9 percent.

Outlook

Semiconductor Equipment Materials International (SEMI) has conducted a
survey of its Silicon Manufacturers Group (SMG) which showed that this year, the
demands of silicon shipment will reach 7.81 billion square inches; to grow to
8.2 billion sq inches in 2007 and will hit its peak record of 9.76 billion sq
inches in 2009.

Asia Pacific continues to be seen as the fastest growing region, to a lesser
extent because of a continuing shift in manufacturing but rather more due to
rising domestic demand in this region. Several key trends, such as Taiwan's
emergence as the second largest consumer of semiconductor materials, China's
growth - especially in packaging, and the tremendous growth of photoresists and
laminate substrates, will have a dramatic impact on the global semiconductor
materials in the coming years.