Despite it being the traditional low season, a recent uptick in demand has foundries feeling optimistic about demand in the first quarter of 2006.

Taiwan Semiconductor Manufacturing Company (TSMC) originally projected its first-quarter revenues will dip more than 10% from the NT$77-79 billion in sales that the company expects to report this quarter. However, the company is now more optimistic, amid increasing chip orders for PC, 3G handset, and gaming applications.

Excluding the long Chinese New Year holiday in mid-January, TSMC expects its utilization rate to remain close to 100% in the first quarter of next year.

In addition, IC design houses said United Microelectronics (UMC) and Semiconductor Manufacturing International Corp. (SMIC) are standing firm on their prices, an indication that the two foundries are expecting strong demand for the first quarter.

Even Vanguard International Semiconductor (VIS), which has seen its utilization rate fall this quarter, stated that orders for LCD driver ICs have been increasing recently and this should help its utilization rate rebound in the first quarter of next year.

IC design houses have been caught off guard by rising demand for PC and wireless networking solutions. After reducing their inventories towards the end of the third quarter due to predictions of a slow fourth quarter, the IC design houses are now increasing their orders with foundries.

By: DocMemory
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