Taiwan Chipmakers Increase Capex

NEW YORK (TheStreet) -- Two Taiwan chipmakers have raised their capital expenditures in a further sign of a recovery of the chip market.

Taiwan's United Microelectronics(UMC Quote) reported Wednesday that it's increasing its capital expeditures for 2009 to $500 million from less than $400 million.

In addition Taiwan Semiconductor Manufacturing(TSMC Quote)revised upward its 2009 capital expenditures budget to $2.3 billion from an estimated $1.9 billion.

The moves are in line with what we had forecast for the two companies in a TheStreet.com column Tuesday when we said that Singapore-based foundry Chartered Semiconductor had raised its 2009 capital budget forecast by a third on growing demand.

In its latest earnings report UMC reported a 109 percent in revenue quarter over quarter. It said wafer shipments increased 134 percent sequentially to 898 thousand in the second quarter, compared to 384 thousand 8-inch equivalent wafers shipped in the first quarter. Overall utilization rate for the quarter was 79 percent, compared to 30 percent in the previous quarter and 85 percent a year ago.

For TSMC, the world's largest foundry, second-quarter revenues were up 88% sequentially. TSMC recorded wafer shipments of 1.97 million 8-inch equivalent units in the second quarter, up 121% from 892,000 units in the first.

As we pointed out in a recent column, the chip market recovery had begun, but tightened purse strings was keeping the semiconductor equipment market from exhibiting comparable up and down cycles characteristic of the semiconductor market.

We said that "In January 1995, 11.4% of revenue generated by semiconductor manufacturers was spent on new processing equipment. Forward to May 2009 and only 3.8% of semiconductor revenue was spent on equipment."