Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman Morris Chang (張忠謀) yesterday urged the government and the central bank to increase efforts to stabilize the local currency, saying the foreign exchange rate could make or break a company.
Chang said the South Korean government had done a better job in capping the appreciation of the won against the US dollar to protect its companies over the past year compared with the Taiwanese government.
“Why is Samsung so successful? It did a great job itself, of course, but the South Korean government was also a great help to the company, especially on the foreign-exchange front,” said Chang, who doubles as the chief executive of the world’s top contract chipmaker.
Chang made the remarks during a speech at a semiconductor forum arranged by the Taiwan Semiconductor Industry Association (台灣半導體協會) in Taipei.
“As Taiwanese exporters book costs in New Taiwan dollars, the foreign exchange rate can affect their competitiveness,” Chang said.
In April, Chang told investors that a strong NT dollar would erode the profitability of TSMC. For every 1 percent rise in the local currency, it would cut 0.4 percentage points off TSMC’s operating profit margin, he said, meaning the chipmaker would make NT$26 billion, or NT$1 per share, less in net profits this year.
The Japanese government has also sought to ease the strains of a strong yen recently, not to mention Beijing’s tough stance on keeping the Chinese yuan steady, even under massive pressure from the US, Chang said.
“For exporters [the foreign exchange rate] is very important. We don’t know what is going on [with the government’s foreign exchange policy],” he said.
The NT dollar surged 9 percent from NT$33 to around NT$30 in just a few months during the global financial meltdown in 2008. After falling to a low of NT$35.174 on March 2, 2009, it picked up speed again. It rose 3.07 percent in the final quarter of last year to NT$30.368 and appreciated 9.4 percent for the whole year, central bank data showed.
The local currency ended this week up 0.034 percent at NT$29.025 yesterday.
“I hope the government can have a more transparent foreign exchange policy,” Chang said.
Chang also expressed optimism about the future of Taiwan’s semiconductor industry, but warned that global economic weakness had lowered the business confidence of TSMC’s customers over the past few months.
Chang will provide guidance for the company’s fourth-quarter outlook next month.
Yesterday, he reiterated that the company had digested most of its inventories and that the company’s factory utilization would rebound next quarter.
In July, TSMC said its goal to increase revenues by 20 percent this year from NT$419.54 billion (US$14.5 billion) last year would not be achievable because weak global economic growth had reduced demand for chips used in end products across the board — computers, smartphones and consumer electronics.
Chang said that the semiconductor sector would develop in the direction of talent and capital concentration, and that its technical scale would also expand gradually.
The solar energy and LED sectors will enjoy the fastest development, Chang said, adding that medical treatment was also a field where semiconductors could play a role.
With all the opportunities on hand, the industry does not need much help from the government in boosting its development, he said.
“The government does not need to give the sector too muchpreferential treatment, so long as it doesn’t become a stumbling block,” Chang said.
Additional reporting by CNA
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