Strong demand continues in Taiwanese IC packaging

TAIPEI: Since early 2010, the in-house capacity of most Taiwan-based wafer foundries and IC packaging and testing houses have fallen short of customer demand. Industry sources say that as a result, these companies are expected to continue to operate under tight production schedules in the third quarter.

It is expected that the third quarter peak season will see a big demand for consumer ICs. The sources say that this includes demand for key components of Apple's new products. The huge sales that the iPad and iPhone have been seeing have resulted in Apple stepping up the purchasing of IC parts. Hence, the component suppliers for the devices are demanding more capacity at their foundry partners and backend subcontractors.

This continued demand for Apple's iPad and iPhone 4 is expected to be one of the contributing factors to a strong third quarter for Taiwan's foundry chipmakers and backend suppliers. But research analysts are of the opinion that this is not the primary factor driving the demand. Many downstream vendors in Europe have placed advance orders for their products, especially notebooks, to be sold in Europe during the year-end holiday shopping season. Another change in the industry is that a weak euro is making many system makers opt to send their shipments by sea to save costs.