The utilisation rate was 89.7 percent in the quarter, up from 87.5 percent in January-March, the Semiconductor International Capacity Statistics (SICAS) group said on Thursday.

The industry group comprises 41 major chip makers including Intel Corp., Samsung Electronics Co. Ltd. and Texas Instruments Inc.

Demand was especially strong for cutting-edge chips, including DRAM (dynamic random access memory) chips and microprocessors that pack more power onto each sliver of silicon, SICAS said.

But the utilisation rate has held below 90 percent for a year, as memory makers ramped up capacity beyond demand, resulting in excess inventory.

Utilisation rates below 90 percent can discourage chip makers from building new factories, which is bad news for suppliers of microchip-making equipment such as Applied Materials Inc. and Tokyo Electron Ltd.

Global orders for chip gear fell 18 percent from a year ago to $10.22 billion in April-June, which was down 4 percent from January-March, industry group Semiconductor Equipment and Materials International said on Wednesday.

Applied Materials, the world's biggest chip gear maker, earlier this week said it expected revenue in August-October to fall 5 percent to 10 percent from the three months ended July.

Capacity for all integrated circuits rose to 1.99 million silicon wafer starts per week in April-June from 1.89 million per week in the previous quarter, SICAS said.

Actual wafer starts, which reflect demand for chips, amounted to 1.78 million a week, compared with 1.65 million the previous quarter.

A wafer start is a lengthy process in which chip circuits are etched onto silicon wafers.

By: DocMemory
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