10.15.2001
Taiwan targeted for outsourcing of InP wafer production

• TRW (US) is reported to be searching for an outsourcing partner for Indium Phosphide (InP) wafer production in Taiwan. Considered foundries include Win Semiconductor, GCT and Suntek (Procomp’s subsidiary), with the deal set for completion sometime in 2002. The 3 compound semiconductor foundries have all entered into the initial stage of trial production on Gallium Arsenide, and yet none have generated revenue from wafer production. Demanding further complexity and technological sophistication, InP represents a more challenging business. In addition, demand for InP is still restricted to telecommunication equipment and is limited in terms of volume. Hence, we see little upside for Taiwan’s players. However, the event indicates an outsourcing trend that would strategically benefit local players. Among the 3, we believe Suntek is least likely to participate in the deal due to its weakest technological capability.