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Sales down for chip contractors

February's results are in, and it was a bad month for two of the world's largest semiconductor foundries.

February's results are in, and it was a bad month for two of the world's largest semiconductor foundries.

Taiwan Semiconductor Manufacturing Co., the largest semiconductor foundry, said its February 2001 sales of $358,235 ($11,614,000 in Taiwan) were down 28 percent from January sales of $498,365. The company's combined January and February sales were $856,600.

Meanwhile, United Microelectronics Corp., also based in Taiwan, reported combined January and February sales of $524,571. Though the combined number is up 36 percent from the same period in 2000, UMC's February 2001 numbers are down. February sales of $231,491 were a decline of 21 percent from the company's January sales.

The falling numbers reflect predictions that first-quarter chip sales will continue to soften in the semiconductor segment. Foundries such as TSMC and UMC manufacture processors for other companies. TSMC, for example, counts chipmaker Via Technologies as a customer. But with demand for chips falling, those customers are not shipping as many chips, which cuts into TSMC and UMC revenues.

These market conditions are expected to get worse before they get better. With its monthly sales report, TSMC estimated sales for the first quarter of 2001 would decrease by 26 percent from the fourth quarter of 2000. The company had previously predicted sales would decrease by about 25 percent.

But TSMC, which also recently reduced its 2001 capital spending projections, remains upbeat about the semiconductor market's long-term prospects.

The company continues to believe that the semiconductor market will begin to turn around in the second half of this year.

The overall industry cycle is expected to trend upward gradually in the second half of 2001. TSMC is optimistic about the future direction of the foundry industry, the company said in a statement released Thursday.