The supply of Japan-made lead frames may be insufficient to meet demand in May due to the upcoming "Golden Week" holiday in Japan. The shortage is likely to affect Taiwan's packaging and testing firms, which have landed increased orders mainly for the China market, market sources have warned.
In order to kick off shipments on schedule, many Taiwan-based backend suppliers will likely transfer some lead frame orders to domestic suppliers, or ones in South Korea, according to the sources.
Semiconductor players saw more short lead-time orders which helped lower their inventory levels in the first quarter of 2009, with delivery lead times shortened to two weeks on average, the sources indicated. A tighter supply of lead frames due to a warming up of demand has extended to three weeks since the end of March.
Since November 2008, packaging and testing houses cut their quotes by 10-20% amid the downturn, by making bargains with their material suppliers and other cost-saving measures, the sources said. However, limited drops in material prices on the tight supply may hurt the backend suppliers' profit performance.
Article translated by Jessie Shen
