Taiwan Semiconductor Plans to Cut Spending Amid Economic Slump

By Janet Ong

Nov. 29 (Bloomberg) -- Taiwan Semiconductor Manufacturing Co., the world’s largest custom-chip maker, plans to cut costs next year as a global economic slump crimps demand for chips used in consumer electronics.

“We are reducing costs to come out stronger from the economic downturn,” J.H. Tzeng, a spokesman for the Hsinchu, Taiwan-based chipmaker, said by phone today. “We have plans to cut costs for everything, but we haven’t made a decision yet,” he said, declining to comment if the reductions would include salary or job cuts.

The Semiconductor Industry Association expects global chip sales will drop 5.6 percent next year. STMicroelectronics NV, Europe’s largest semiconductor maker, yesterday said fourth- quarter revenue would be below the company’s forecasts because of a slowdown in orders.

Consumer electronics companies ranging from Nokia Oyj to Panasonic Corp. have slashed forecasts this month as consumers buy fewer mobile phones, flat-panel televisions and computers.

Taiwan Semiconductor, plans to cut capital expenditure in 2009, although the final budget is still being decided, Tzeng said. The company on Oct. 30 said it is considering a 20 percent cut in spending, according to Tzeng. The company will announce details at an investors briefing to be held at the end of January, he said.

The chipmaker, which employs about 23,000 people, has also imposed a hiring freeze, and would consider hiring only if there are special needs, Tzeng said.

Unpaid Leave

Smaller rival United Microelectronics Corp may ask workers to take unpaid leave in 2009 to cut costs, the Economic Daily News reported today, citing unidentified company executives. The firm has already trimmed its workforce so it doesn’t plan to cut wages or ask staff to take unpaid leave this year, the Chinese- language newspaper said. Alex Hinnawi, a spokesman at United Microelectronics declined to comment on the report.

Taiwan’s jobless rate rose to its highest in more than three years in October after the economy contracted. Taiwan’s economy will follow Asian neighbors Japan, Singapore and Hong Kong into a recession this quarter after shrinking in the three months through September, the government aid on Nov. 20.

To contact the reporter on this story: Janet Ong in Taipei at jong3@bloomberg.net