Taiwan Falling Chip Sales

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The fact that the sales of semiconductor manufacturers in Taiwan are declining shows: The chip boom is over.

In February, the turnover of TSMC, the world's largest foundry, fell by 22 percent compared to the previous month to around 2 billion dollars. Compared to the same month last year, the figure was 5.8 percent. The sharp decline is also attributable to an accident at the Fab in Tainan: One supplier had supplied material that did not meet the specifications and caused production stoppages. According to TSMC, the problems had been solved and sales would return to normal over the coming months.

But what is normal? In the first two months of the year, sales fell by 3.7 percent. This shows that the boom phase in semiconductor production is over, even if some additional holidays in Taiwan in February are taken into account, which distort the picture a little for the past month.

This is because other semiconductor manufacturers are also suffering declines. The turnover of UMC, the third largest foundry in the world and also based in Taiwan, fell by 11 percent in February, compared to 12 percent in the same month last year. Cumulatively, sales in the first two months of 2019 fell by 11.3 percent to 22.3 billion Taiwan dollars. 

At ASE, the world's largest packaging and testing service provider, February sales plummeted more than 20 percent to $26 billion. In the first quarter of 2019, the company expects a similar percentage decline from the fourth quarter of 2019 to 114 billion Taiwan dollars. 

Vanguard also suffered a double-digit decline in sales in February: It fell by 16.2 percent compared with January to 4.7 billion Taiwan dollars.

Mediatek, on the other hand, recorded a plus of almost 3 percent over the first two months of 2019, even though February sales fell by almost 13 percent to 14.2 billion Taiwan dollars. The smartphone market is still weak.