Jun 06, 2001 Taipei, June 6 (Bloomberg) -- Royal Philips Electronics NV, Europe's largest consumer electronics company, said it will place an order with Taiwan Semiconductor Manufacturing Co. for a new chip, helping to boost the chipmaker's sales during a period of sagging demand.
The biggest chipmaker to other companies' specifications is making samples of the new chip, used in digital products such as cable TV boxes, said Robyn Kao, a marketing manager at Philips's Taiwan unit. Philips will place the order with TSMC when it starts mass producing the chip by the end of the year.
``It's good news for TSMC,'' said Kirby Chi, an analyst at Tong Lin Securities Consultants Co. ``New orders are starting to appear and more should gradually follow.''
The order comes at a time when TSMC is using half its chip- making equipment in the second quarter and expects 2001 profit to decline 60 percent from last year as orders and prices of semiconductors fall.
Anticipating a recovery to begin in the second half of the year, TSMC and Philips opened a $1.2 billion chip plant in Singapore in May. Philips held about 14 percent of TSMC as of the end of last year, according to Taiwan Stock Exchange records.
At the Taipei Computex computer trade show yesterday, Philips displayed samples of the new chip made by TSMC that combines the functions of several chips on one piece of silicon.
``We expect mass production in the second half,'' Kao said, denying a report in the Economic Daily that Philips will contract the whole order to TSMC. ``An order will partially be placed with TSMC,'' he said.
TSMC shares rose as much as NT$3, or 3.3 percent, to NT$94, in early trading. The shares have risen 19 percent this year, compared with a 9 percent gain in the main TWSE Index.
