Chip orders revive TSMC production lines

World's largest contract chip maker ended employee furloughs due to rush orders for chips

Taiwan Semiconductor Manufacturing (TSMC) has ended unpaid leave for employees due to rising chip orders, the company said in a statement Friday.

The world's largest contract chip maker, considered a bellwether for the technology industry due to the wide range of products the chips it makes go into, said all employees will start a normal five-day work week next month.

"However, as the fundamentals of the economy are not significantly improved, we should remain cautious and watchful of our costs," the company said in a letter to employees.

The global recession prompted a number of Taiwanese companies to cut back work days and salaries as demand slowed last year. Chip workers at TSMC had seen their work week reduced to four days from five along with their pay.

The chip giant is the second major Taiwanese company to announce improvements for workers.

Hon Hai Precision Industry, the world's largest contract electronics manufacturer that assembles products ranging from Apple's 3G iPhone to Sony's PlayStation 3, is hiring again in China after months of layoffs.

The company, which operates under the trade name Foxconn, said early this month it is increasing its payroll in China by 5 percent because the downturn has not been as bad as expected. The company employs between 300,000 and 500,000 workers in China.

TSMC also last week revised up its first quarter financial outlook due to what it called increased "rush orders," the term for unanticipated orders for chips. However, TSMC cautioned that those rush orders do not necessarily indicate a long-lasting trend.

The chip maker raised its first quarter revenue forecast to between NT$36 billion (US$1.06 billion) and NT$38 billion from previous guidance of NT$32 billion to NT$35 billion.

Other chip makers have also reported slightly better prospects recently, all tied to demand for 3G mobile phone network equipment and handsets in China.

Texas Instruments, Altera and Xilinx of the U.S., and MediaTek of Taiwan have all recently raised their quarterly revenue guidance due to increased 3G chip demand from China.

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