Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday posted its first revenue decline in five months, reporting NT$72.28 billion (US$2.31 billion) for last month amid customers’ inventory correction.
Sales contracted by 10.48 percent from October’s NT$80.74 billion. However, compared with the same period last year, revenue soared 63 percent from NT$44.33 billion.
The contraction was not a surprise, as TSMC co-chief executive Mark Liu (劉德音) had said in October that “cautious inventory adjustment actions taken by some of our customers will bring slower fourth-quarter demand.”
The company could still post record revenue for the current quarter, thanks to strong demand for 4G smartphones in China and increased orders for TSMC’s advanced 20-nanometer (20nm) chips, Liu said.
TSMC, which supplies processors for Apple Inc’s iPhone 6 series, has estimated that revenue for this quarter could grow by between 4 and 5 percent sequentially to between NT$217 billion and NT$220 billion, raising its total revenue this year by 27 percent to a record NT$757.29 billion.
TSMC forecast that revenue for next year would grow by 15 to 20 percent from this year, thanks to strong demand for its 20nm chips, new 16nm FinFET chips and 28nm chips, as well as less-advanced chips from its 8-inch factories.
Barclays Capital Securities Taiwan Ltd is also optimistic that TSMC’s growth momentum would carry into next year, adding that the company’s current growth forecast is much higher than its previous forecast of 10 percent annual expansion.
Moreover, the Hsinchu-based company might increase its capital spending for next year to more than US$12 billion, compared with an initial estimate of US$10 billion made in October, Barclays Capital analyst Andrew Lu (陸行之) said in a report released yesterday.
This year, TSMC plans to spend US$9.6 billion on new equipment mostly to boost its 20nm capacity.
The brokerage downplayed the impact of TSMC’s potential market share loss to rivals in the 16nm FinFET chip market next year and in 2016, and raised its share price target for TSMC to NT$180 from NT$170.
The upgrade has factored in the seasonal weakness next quarter after Apple ends ramp-up of its iPhone 6 series, Lu said.
Barclays’ 12-month target price implies 32.35 percent upside from TSMC’s closing price of NT$136 yesterday, Taiwan Stock Exchange data showed.
The brokerage also revised upward its earnings forecast for TSMC by 10 percent for next year and 11 percent for 2016, citing stronger revenue and margins.
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