Output of IC packaging, testing industry growth forecast at almost 9%

Taipei, Sept. 25 (CNA) The production value of the local integrated circuit (IC) packaging and testing industry is expected to grow almost 9 percent from a year earlier in 2020 on the back of the booming "stay at home economy" in the Internet era, the Market Intelligence and Consulting Institute (MIC) said Friday.

In addition, the emerging 5G technology as well as the launch of new products by international smartphone brands are expected to help Taiwanese IC packaging and testing services providers to secure more orders, the MIC said.

According to a research report released by the MIC under the government-sponsored Institute for Information Industry, the output generated by Taiwanese IC packaging and testing firms is expected to hit NT$519.7 billion (US$17.74 billion), up 8.9 percent from a year earlier.

Cheng Kai-an (鄭凱安), a senior industrial analyst and product manager at the MIC, said many suppliers in the local industry benefited from an increase in shipments in the first half of this year as orders were shifted from their counterparts located in Southeast Asia, where the prevalence of COVID-19 appeared more severe.

In the second half of the year, the industry has been getting an additional boost from international brands' efforts to unveil new smartphones and gaming consoles, Cheng said.

However, the MIC has forecast that Taiwan's IC packaging and testing industry will see its production value for the fourth quarter falling about 2.1 percent from the third quarter due to the slow-season effect, although it could rise 1.1 percent from last year's fourth-quarter output.

Cheng said that sanctions imposed by the United States on China's Huawei Technologies Inc., which became effective on Sept. 15, are expected to reduce orders from the Chinese telecom equipment giant in the fourth quarter.

The U.S. Department of Commerce (DOC) added 38 Huawei affiliates to the U.S. government's economic blacklist on Aug. 17 amid escalating tension between Washington and Beijing.

The new measures raised the total to 152 affiliates on the list since Huawei was first added in May 2019. The expanded restrictions were aimed at preventing Huawei from using affiliates to circumvent the sanctions that have been put in place to prevent exports of American technology to the Chinese company.

Before the tighter restrictions on Huawei took effect, the Chinese firm had been keen to build up its inventories, Cheng said, but the high inventory level boosted by Huawei's purchases could pave the way for risks to the global semiconductor industry in 2021.