Shares in Taiwan Mask Corporation rose 6.75 percent yesterday to NT$34.80 as semiconductor stocks rose and after the company announced its net income for the first half of the year had increased by over 400 percent compared with the same period last year.
However, TMC also said its July revenue figures, to be released soon, are unlikely to surpass June's revenue of NT$175 million. Securities analysts also expressed reservations about the future prospects for the company if it doesn't upgrade itself and if the IC up-cycle starts to peter out.
TMC is a manufacturer and leading supplier of photomasks in the Asia Pacific region. Photomasks are high precision quartz plates that contain microscopic images of electronic circuits and are used to transfer circuit patterns onto semiconductor wafers during the fabrication of integrated circuits. For the first six months ended June, TMC reported a net income of NT$204.39 million, or an earnings per share of NT$0.70. The figure is over four times higher than the NT$40.46 million reported for the same period last year, and nearly 33 percent of the company's target net income for this year of NT$619.84 million. It has set a target earnings per share for the year of NT$2.05.
Calvin Liu, resources manager at TMC, was pleased with the results and optimistic about the next six months. "The second half should be much better than the first half," he said. "We should have no problems reaching our target." However, Liu also said that although the figures for July revenue haven't yet been released, "They're a little less than June."
Local media sources indicated that a July revenue of over NT$170 million was being predicted, lower than the targeted NT$180 million because of TMC's delay until August in the delivery of some 0.25 and 0.18 micron photomask products. Currently, 0.35 micron photomask products account for about 60 percent of total production.
TMC is planning to increase production of the more advanced 0.25 and 0.18 micron photomask products over the second half of the year. About time too, according to Raymond Wu, a semiconductors analyst at a local securities house. Wu believes the company has plenty of room to improve and had better get its act together before it's too late. "This is not a good company; it's an average company which happens to be going through a good time," he said.
If the company fails to upgrade to 0.18 micron photomask products soon, it'll fall further behind the competition, and will face even greater difficulties to improve next year, said Wu.
US-based DuPont Photomasks, Inc (DPI) and Phototronics are two of TMC's main competitors. At the end of July, DPI reported net income for fiscal 2000 of US$26.1 million, over 50 percent higher than the previous year. It also reported that 50 percent of fourth quarter revenues was from 0.25-micron and below products, and nearly 25 percent was from 0.18-micron and below.
For TMC to keep in the picture and improve its efficiency, Wu said the company should also look to upgrade capacity utilization. "They could very quickly improve it to 90 percent," he said. Currently, TMC's capacity utilization rate is 60 percent plus. In comparison, TSMC's utilization rate is over 100 percent, said Wu.
Milton Huang, midstream electronics analyst at National Securities Corp, is less than optimistic about TMC's prospects. "TSMC and UMC now have their own in-house mask facilities, so orders have decreased a lot," he said.
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