Taiwan foundry houses see poor order visibility for the second quarter of 2019, as domestic and international IC design houses need more time to digest their chip inventories, according to industry sources.

Almost all chipmakers are actively finding ways to reduce their inventory turnover days, and chances are not great for them to resume regular order placement with foundry houses in the second quarter of the year, the sources said.

The order visibility for 12-inch wafer foundry services by TSMC and UMC has reportedly remained opaque for the second quarter, with sizes of orders received also shrinking slightly. And only their 8-inch wafer foundry fabs can maintain high capacity utilization rates in the short term.

Foundry houses in Taiwan and China have hoped their revenues will bottom out in the first quarter and then pick up gradually, but the hopes may be dashed by unclear order visibility for the second quarter.

As most heavyweight chipmakers remain reluctant to place new orders for the second quarter, many foundry houses across the Taiwan Strait can hardly enjoy an upturn in capacity utilization rates and may even see the rates fall further in the quarter. And whether their revenue performances will turn around will hinge on how strong the peak season will be in the second half of the year, industry sources indicated.

On another front, downstream brand vendors and ODMs will be able to reduce their components procurement costs in 2019 as they can more easily ask for lower quotes from chipmakers due partly to the loosening foundry capacity supply.

By: DocMemory
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