Fri, Jul 25, 2003 - Page 10 News List

TSMC's quarterly profit grows by 26%

SALES FORECAST The company is the latest chipmaker to predict an end to a three-year slump in demand and its second-quarter numbers give good cause for optimism


Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電), the world's largest supplier of made-to-order chips, had its highest quarterly profit in more than two years as it used its most advanced factory gear to make more profitable chips.

Net income rose a better-than-expected 26 percent to NT$11.7 billion (US$340 million), or NT$0.58 a share, in the three months ended June 30, from NT$9.3 billion, or NT$0.45, a year ago.

The company said it expects demand for chips used in consumer electronics and mobile phones will increase this quarter, while computer-chip sales will drop.

TSMC joins other chipmakers including Intel Corp and Texas Instruments Inc in forecasting higher sales after a three-year slump in demand.

"TSMC has once again demonstrated its ability to cater to clients' needs with superior production technologies," said Tracy Chen, who manages US$76 million in stocks at Prudential Securities Investment Trust Co (保誠投信).

Global chipmakers, including Intel, Texas, Samsung Electronics Co and Advanced Micro Devices Inc, all forecast higher sales for this quarter in the past two weeks.

Other chip manufacturers aren't so optimistic.

Europe's largest semiconductor maker, STMicroelectronics NV,yesterday cut its forecast for profitability and said prices haven't improved.

"Some companies have done better than others," said TSMC chairman Morris Chang (張忠謀). "I don't think you can call it a recovery, at least not yet."

TSMC's shares gained NT$1, or 1.7 percent, to NT$58.50 before the earnings announcement. The company's shares have climbed 48 percent this year.

The company's second-quarter sales rose 13 percent to NT$50 billion from NT$44 billion. Computer chips accounted for 43 percent of second-quarter sales, from 45 percent in the same period a year ago. Sales of communications chips, used in mobile phones and networking equipment, rose to 34 percent of revenue from 26 percent.

TSMC said its factory usage rose to 88 percent in the second quarter, from 69 percent in the first quarter. The company expects to use more than 90 percent of its factory equipment this quarter.

In the second quarter, 62 percent of TSMC's wafer sales came from its advanced technology, up from about 55 percent a year ago. That helped push its gross margin -- the percentage of sales left after production costs -- to 36.8 percent from 26.4 percent in the first quarter.

Sales from the company's most advanced production lines, which produce chips with circuits meas-uring 0.13 micron wide, rose to 17 percent of the total from 1 percent a year ago, chief financial officer Harvey Chang (張孝威) said in a statement.

"We expect the performance in the coming quarter will be at least in line with that in the second quarter," Chang said.

Wafer shipments will grow by a mid to high single-digit percentage from the first quarter, while average selling prices, which rose 4 percent from the first quarter, will hold firm and may increase, he said.

The company expects to spend about US$1.25 billion on plants and equipment this year, the middle of its US$1 billion to US$1.5 billion range.

Chang said the company's key financial indicators remain healthy.

TSMC had NT$63.2 billion of debt, or 16.2 percent of its NT$390.5 billion in total assets, at the end of last year.

The ratio rose from 15.7 percent in 2001 and 15.2 percent in 2000.

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