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Taiwan’s Electronics Industry Could Face a Long Winter
Morris Chang, Chairman of TSMC, is somewhat less than sanguine about the prospects for the economy and in particular for Taiwan’s electronics industry next year. He also may have taken some of the fuel out of the fire with comments yesterday about the lack of willingness to invest among those in the industry. For their part, several of Chang’s colleagues in the industry have echoed his comments while adding that the TSMC Chairman may have spoken a bit too soon. The industry is facing a slowdown in the world economy as well as weak orders from overseas that could lead to more rounds of layoffs for makers in Taiwan.
Liu Chi-tung, Chief Financial Officer of UMC, notes that orders have already been tailing off since the previous quarter, adding that levels are the lowest they have been in a decade. He expects this trend to continue for at least several months or even quarters. With forecasts for the fourth quarter of 2011 even more conservative than those of TSMC, Liu says that Chang’s dour outlook comes as no surprise.
Liu Chi-chuan, CEO of DRAM maker Inotera Memories, points out that the global economy looks to remain down well into 2012, while Powerchip Technology spokesman Chang Chung-mo notes that Taiwan’s DRAM manufacturing sector has already been in a slump for several years. With economic forecasts calling for more gloom and doom, he says, recovery in consumer confidence is likely to be a long way off and the recession will linger on.
Chairman Barry Lin of notebook giant Quanta says that the coming winter in the electronics industry could be even worse than the recent financial crisis, while President Ray Chen of Compal sounds what may be the only faintly optimistic note, saying, “No matter how tough it may get, we’ll get through it!”
A couple of months ago makers started arranging paid leaves for employees in order to weather the ongoing slowdown in orders. This could lead to unpaid leaves, and after that even more drastic moves could be called for. So far, however, none of the major players has been willing to take the next step.
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