Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電), the world's largest supplier of made-to-order chips, posted a one-third drop in first-quarter profit because it bought more production equipment than it could use.
Net income dropped to NT$4.4 billion (US$126 million) from NT$6.6 billion in the first quarter last year, the company said.
Analysts had expected profit to fall by more than half to NT$2.9 billion.
Profit fell because the company bought more plant and equipment than it could win orders for to utilize fully. TSMC used 67 percent of its factory capacity in the first quarter, the same as a year ago, it said.
Sales, announced earlier, rose 10 percent to NT$39.3 billion from NT$35.8 billion.
TSMC's "revenue has clearly touched bottom in the first quarter of 2003," chief financial officer Harvey Chang (
The company's operating performance will improve in the second quarter, he said.
In response to slowing orders, TSMC has cut its planned spending on new equipment to as little as US$1 billion this year, having pared last year's budget to US$1.65 billion from an original US$2.5 billion.
Global chip sales rose at their slowest pace in seven months last month, according to figures on Monday by the San Jose, California-based Semiconductor Industry Association. They increased less than 2 percent last year after contracting by a third in 2001, the industry's worst-ever decline.
TSMC's return on equity, or net income as a percentage of shareholders' funds, was 5.9 percent in the first quarter, down from 9.4 percent in the year-ago period.
The company is aiming for a return on equity this year of 20 percent.
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