Industry Update- Taiwan

Dan TracySEMI Industry Research & Statistics Group

SEMICON WEST 2010July 14, 2010

2

Record IC Unit Shipments

Source: WSTS/SIA

Chip demand drives material consumption and capital investment

IC Unit (3-month average) and ASP Trends

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Jan-

03M

ar-0

3M

ay-0

3Ju

l-03

Sep-

03N

ov-0

3Ja

n-04

Mar

-04

May

-04

Jul-0

4Se

p-04

Nov

-04

Jan-

05M

ar-0

5M

ay-0

5Ju

l-05

Sep-

05N

ov-0

5Ja

n-06

Mar

-06

May

-06

Jul-0

6Se

p-06

Nov

-06

Jan-

07M

ar-0

7M

ay-0

7Ju

l-07

Sep-

07N

ov-0

7Ja

n-08

Mar

-08

May

-08

Jul-0

8Se

p-08

Nov

-08

Jan-

09M

ar-0

9M

ay-0

9Ju

l-09

Sep-

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ov-0

9Ja

n-10

Mar

-10

Bill

ions

of U

nits

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

US$

IC UnitsIC ASP

3

2010 Semiconductor and IC Revenue Forecasts

Source: SEMI

25.0%

27.0%

27.1%

27.9%

28.4%

28.6%

30.6%

31.0%

32.7%

23.0%

0% 5% 10% 15% 20% 25% 30% 35%

Databeans (Apr 10)

VLSI Research (May 10)

IC Insights (May 10)

Gartner (Jun 10)

Semico Research (Jun 10)

SIA (Jun 10)

WSTS (Jun 10)

iSuppli (May 10)

Future Horizons (May 10)

Henderson Ventures (Jun 10)

4

Taiwan Market

“TSMC Chang more upbeat on 2010 chip growth”Digitimes, June 15, 2010

“Taiwan to invest in NAND flash project”SiliconStrategies, June 30, 2010

“ASE raises 2010 capex”Digitimes June 15, 2010

“UMC capacity bookedthrough 3Q10, says CFO”

Digitimes, June 15, 2010

“Chipbond at almost full capacity”

Digitimes, June 23, 2010

5Source: Company reports

Outsource Manufacturers Monthly Sales

2Q 2010

- +13% > 1Q 2010

- +39% > 2Q 2009

Combined Monthly Revenues- 3 Mo. Avg.(ASE, SPIL, TSMC, and UMC)

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan-

03M

ar-0

3M

ay-0

3Ju

l-03

Sep-

03N

ov-0

3Ja

n-04

Mar

-04

May

-04

Jul-0

4Se

p-04

Nov

-04

Jan-

05M

ar-0

5M

ay-0

5Ju

l-05

Sep-

05N

ov-0

5Ja

n-06

Mar

-06

May

-06

Jul-0

6Se

p-06

Nov

-06

Jan-

07M

ar-0

7M

ay-0

7Ju

l-07

Sep-

07N

ov-0

7Ja

n-08

Mar

-08

May

-08

Jul-0

8Se

p-08

Nov

-08

Jan-

09M

ar-0

9M

ay-0

9Ju

l-09

Sep-

09N

ov-0

9Ja

n-10

Mar

-10

May

-10

NT$

Mill

ions

6

Taiwan Fab Capacity – Foundry to drive capacity growth

Source: SEMI World Fab Forecast, May 2010

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

8" equiv wafer K

/month

2007 2008 2009 2010 2011

Taiwan Fab Capacity - Foundry & DRAM

AnalogDiscreteFoundryLogicMemoryMEMSOther

7

Foundry Capacity Share – Taiwan Leads the pack

Source: SEMI World Fab Forecast, May 2010

0%

20%

40%

60%

80%

100%

2007 2008 2009 2010 2011

Worldwide Foundry Capacity Share

TaiwanSE AsiaKoreaJapanEurope & MideastChinaAmericas

8

Taiwan Fab Spending – Foundry & DRAM-driven

Source: SEMI World Fab Forecast, May 2010

2711

8380

1576

3641

2746

1120 5574

3265

6384

3795

0

2000

4000

6000

8000

10000

12000

US$ M

illion

2007 2008 2009 2010 2011

Taiwan Fab Spending by Product Type

OtherMEMSMemoryLogicFoundryDiscreteAnalog

9

Taiwan Foundry: Strong rebound!!

• Taiwan foundries led strong recovery of wafer shipment and utilization starting from 2Q09.

• Aggressive capacity and technology investment from 3Q09 onwards are much faster than earlier expected.

• Market dynamics: IDM’s fab-lite strategy and legacy fabclosures will continue to foster foundry business.

• Ongoing consolidation – for both market share and geographic presence.

10

DRAM: 50nm and below transition

• DRAM market shall remain healthy throughout the year as supply increase still lag behind demand.

• 50nm and 40nm class migration from DRAM sector will continue to drive the equipment spending for 2H10 and 2011.

• The availability of immersion tools has become the bottleneck of technology migration and capacity expansion plan.

11

Some Recent 2010 Announcements

TSMC• US$4.8 billion capex plan; Over 90% for “advanced node” capacity• 28 nm pilot to start in mid 2010.• New GigaFab project – Fab 15 in Taichung start groundbreaking this year.

UMC• Capex will be in the range of US$1.2 billion to US$1.5 billion• Fab 12A 40/45nm capacity, 28 nm development• Fab 12A P3/P4: related construction to be completed by 3Q10

Nanya /Inotera• 50 nm process starting, 42 nm schedule to pull in starting from 3Q10.• Nanya to raise capex for Fab 3 expansion.

Powerchip/Rexchip• Node migration to 45nm being delayed due to the availability of litho tools.• Powerchip and Rexchip both plan around US$390M capex this year.

Source: SEMI, Company announcements, and DigiTimes

12

Some Recent 2010 Announcements

SPIL• Capex further expand to over US$600M this year, mainly for copper wire bonding expansion.

ASE• Capex revised from US$500M to US$700M. (a historical high)

Powertech Technology• New Hsinchu plant started equipping in 2Q10 and will come on-line in 3Q10.• Plans to increase 35%-40% capacity this year.

Walton Advanced Engineering• New facility in Kaohsiung (from Hannstar) will come online in 3Q10. (pull in one quarter)

Ardentec• Plans to increase capacity in Taiwan and Singapore facilities.

Source: SEMI, Company announcements, and DigiTimes

13

Dedicated LED Fabs

4# of fabs

Europe

● Upcoming fabs

Legend

9# of fabs

Korea

Source: SEMI® Opto/LED Fab Watch / World Fab Forecast, June, 2010

Notes:• Filtered by Product Type: Discrete/LED• Information is subject to change.

3# of fabs

North America

28# of fabs

China

11# of fabs

Japan

37# of fabs

Taiwan

2# of fabs

Southeast Asia

14

Known Investments for Dedicated LED Fabs

$337 MKorea

$600 MTaiwan

S.E. Asia

Europe & Mideast

North America

Japan

China

Region

$270 M

$60 M

$ 12 M

$ 3 M

$503 M

2010 Fab Spending (Construction / Equipping)

Notes: - Data is estimated for 2010- List above only includes Dedicated LED Chip making fab.

Source: SEMI® World Fab Forecast, June 2010

15

Taiwan LED Manufacturers: Growing InvestmentsEpistar• Plan to expand MOCVD tool from 180 to 220 in Taiwan.• Two new LED JV fabs in China will come on line in 2011.• Acquire 48% stake of Huga Optotech.

Lexstar• Aggressive ramp of epi capacity from 30K/M in 1Q10 to 130K/M in Taiwan.

TSMC• Invest US$175M to build a LED lighting R&D center in Hsinchu.

Formosa Epitaxy• To increase a dozen MOCVD tools in Taiwan this year.• New fab in Yangzhou China will come on line in 3Q10.

Chimei Lighting Technology• To accelerate capacity expansion by acquiring facility and equipment from GIO Opto.

Genesis Photonics• New plant in Tainan to come online in 3Q10, with maximum capacity of 50K/month. • New JV project in Kunshan, China is planned in 2011.

Source: SEMI, Company announcements, and DigiTimes

16

TSV

• ITRI– In July, ITRI establishes the first 12-inch wafer TSV

experimental line in Asia to develop Taiwan's home-grown 3D IC technology.

– Companies that also join the TSV R&D initiative include ASE, UMC, SPIL, Hermes, etc.

17

SEMI® 2010 Mid-Year Equipment Forecast By Market Region

Source: SEMI Mid-Year 2010 Semiconductor Consensus Forecast, July 2010

Totals may not add due to rounding

$0$5

$10$15$20$25$30$35$40$45

N. America Japan Taiwan Europe S.Korea China ROW

ROW 3.05 2.61 1.44 3.01 3.80China 2.99 1.89 0.94 2.24 2.64S.Korea 7.35 4.89 2.60 7.49 8.08Europe 2.94 2.45 0.97 1.92 2.10Taiwan 10.65 5.01 4.35 9.18 9.28Japan 9.31 7.04 2.23 4.08 4.70N. America 6.55 5.63 3.39 4.57 4.94

2007 (A) 2008 (A) 2009 (A) 2010 (F) 2011 (F)

US$

Bill

ions

$15.92

$32.50$29.52$35.53

$42.77

18

SEMI® 2010 Materials Forecast By Market Region

$0$5

$10$15$20$25$30$35$40$45$50

N. America Japan Taiwan Europe S.Korea China Southeast Asia

Southeast Asia 4.55 5.03 6.18 6.79 6.90 5.98 6.78 7.13China 1.28 1.64 2.38 3.31 3.57 3.26 3.86 4.25S.Korea 3.10 3.78 4.88 6.10 5.90 4.69 5.74 6.16Europe 2.80 2.88 3.39 3.68 3.32 2.52 2.96 3.09Taiwan 4.85 5.31 6.74 8.34 7.87 6.77 8.17 8.80Japan 7.61 7.58 8.57 9.19 9.96 7.63 8.69 9.01N. America 4.63 4.72 5.11 5.25 4.99 3.79 4.29 4.48

2004 2005 2006 2007 2008 2009 2010F 2011F

US$

Bill

ions

$37.25

$28.82

$42.52

$34.63$30.94

Totals may not add due to rounding.

Source: SEMI Materials Market Data Subscription May 2010

$42.67 $42.92$40.48

19

Global Spending on Semiconductor Equipment and Materials

2010 Spending Outlook = ~$73 Billion

China8% North

America12%

Japan18%

Korea18%

Europe7%

Taiwan24%

Southeast Asia13%

Source: SEMI

Taiwan Market #1 spending region in 2010 11% growth in 300mm fab capacity this year Estimated $120 billion spent since 2001

20

Summary• Semiconductor industry recovery

– Strong double-digit growth in 2010

• Taiwan market– Strong recovery in foundry (and packaging) beginning in 2Q 2009

leading to increases in capex– Challenges for Taiwan’s DRAM makers.

• Some boost in capex for 2010/11 for 50 nm and below technology– #1 market for foundry capacity, # 2 market overall for 300 mm

capacity

• Semiconductor Equipment and Materials Market in Taiwan– Will be the #1 region for equipment spending– The # 2 largest market for semiconductor materials

21

谢谢！

Ana LiSEMI Taiwan

July 14, 2010

The Most Effective Semiconductor Event in Taiwan!

Agenda

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• SEMICON Taiwan 2010 Features- Technology Pavilions- Programs & Events- Marketing Promotion Opportunities

• SEMICON Taiwan 2010 Visitor Promotion

2010/7/143

SEMICON Taiwan 2010• Date：

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FoundriesTSMCUMCSMICCharteredDongbuAnamHHNECVanguardSSMCHe JianJazz

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2010/7/147

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Networking EventGolf Tournament

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• Date: Saturday, Sep 11, 2010

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ManufacturersVisiting

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