Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday posted another record high quarterly profit for last quarter, but it expects revenue to decline by about 10 percent sequentially this quarter because of slowing demand for certain high-end smartphones and inventory correction.
Net profit rose 0.3 percent to NT$51.95 billion (US$1.76 billion) in the quarter ending on Sept. 30, compared with the second quarter’s NT$49.38 billion, TSMC’s financial statement showed. On an annual basis, the figure represented a 5.2 percent increase.
This quarter, revenue is expected to slide to between NT$144 billion and NT$147 billion, meaning a quarterly reduction ranging from 9.58 percent to 11.43 percent, compared with NT$162.58 billion last quarter. More than half of TSMC’s revenue comes from the communications sector’s demand primarily for chips in handsets.
The quarterly contraction is more than the 11 percent drop estimated by Daiwa Capital Markets analyst Eric Chen (陳慧明) and the decline of 7 percent to 9 percent estimated by Michael Chou (周立中), who tracks the semiconductor industry for Deutsche Bank.
“This decline is mainly attributed to the soft demand for certain high-end smartphones and inventory correction,” TSMC chairman and chief executive officer Morris Chang (張忠謀) told an investors’ conference.
“We believe the decline is short- term,” Chang said.
Revenue for the whole of this year is expected to grow to between 17 percent and 18 percent annually, primarily boosted by its 28 nanometer (nm) chips, which would outpace the sector’s 11 percent growth and global semiconductor’s 4 percent increase, Chang said.
The supply chain’s day of inventory (DOI) is expected to drop significantly to approach the seasonal level at the end of this quarter, after DOI rose to above seasonal levels last quarter, Chang said.
Gross margin is expected to fall to between 44 percent and 46 percent from 48.9 percent last quarter, TSMC forecast.
“We are optimistic about 2014,” Chang said, expecting the company’s revenue to expand by a double-digit percentage next year from this year.
TSMC, which considers technology, manufacturing and customer partnership as its strengths, said it will be able to maintain its high market share in 28nm technology in the next few years and is confident that its 20nm technology will be very competitive.
TSMC has an 84 percent share of the 28nm chip market and generated 32 percent of its total revenue from 28nm chips last quarter.
The chipmaker is scheduled to ramp up production of advanced 20nm chips in the first quarter of next year. Revenue from the advanced 20nm chips are expected to account for 10 percent of the company’s total revenue next year.
Despite the strong business prospects, Daiwa’s Chen said yesterday that he “suggests potential investors remain on the sidelines as we see if the stock is being fully valued. We will become more critical of TSMC, if the shares drop below NT$95.”
He retained a “hold” rating on TSMC.
Shares rose 0.94 percent to NT$107 yesterday, the highest level in three months since July 18.
Chang said TSMC was to spend a similar amount of capital next year at about US$10 billion, compared with US$9.7 billion this year.
Addressing the issue of his CEO succession plan, Chang said TSMC would appoint a chief executive, or two co-CEOs by June next year as originally planned.
Chang resumed his position in June 2009 and said at the time that he would be in the position for three to five years.
Both co-chief operating officers (COO) Mark Liu (劉德音) and Wei Che-chia (魏哲家) are logical candidates to be the new CEO, after COO Chiang Shang-yi (蔣尚義) decided to retire at the end of this month, he said.
Chang said he would remain company chairman and would continue to have a “hands-on” role.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS