Consumer electronics to drive chip demand

Rising demand for products that blur the lines between consumer electronics devices and computers has become one of the most important sources of demand for semiconductors, but this presents a host of challenges for chip makers, according to the chairman of Taiwan Semiconductor Manufacturing Company (TSMC).

"Digital consumer electronics is emerging quite fast to be a demand driver," founder and chairman of TSMC, Morris Chang, in a keynote speech at Computex 2004.

The rising importance of digital consumer electronics comes as the semiconductor manufacturing industry enjoyed a pretty good boom, Chang said.

"The industry has had three years of anaemic growth but I'm happy to report that this year it has all changed," he said.

After laboring through a downturn in demand, the semiconductor industry grew by 18 per cent during 2003 and could grow by up to 30 per cent during 2004, Chang said.

Looking ahead, overall growth would remain strong through the remainder of this decade, he said, reiterating a prediction that the industry would enjoy a compound annual growth rate of 10-12 per cent through 2010.

Much of this growth would come from demand for consumer-electronics applications, in addition to personal computers and mobile phones, Chang said.

For example, the rollout of High-Definition Television (HDTV) would completely change the content production, storage, broadcast and reception infrastructure that existed for television, he said.

"It is a very big opportunity for the semiconductor industry in the latter half of this decade," Chang said.

Opportunities created by technologies such as HDTV broght with them a range of new challenges for the semiconductor industry, he said.

Product life cycles for chips would likely be shorter and getting new products to market fast would be more important than ever before, Chang said. In addition, digital consumer electronics would require greater product differentiation and increased functionality without compromising customer demands for high-quality products available at a low cost, he said.

In response to the growing demand for digital consumer electronics, TSMC will expand its manufacturing capacity for mature production processes, including 130 nanometers, 150 nanometers and 180 nanometers, Chang said.

At the same time, the company will continue to invest in leading-edge processes, Chang said, noting that TSMC will begin production using a 65-nanometer process in late 2006 and expects to see a 45-nanometer process enter production in late 2008.

In addition to expanding production capacity for mature production processes, TSMC would make more services available to its customer to help shorten product design cycles and reduce the time it takes to bring chips into volume production, Chang said.