Fri, Jul 09, 2004 - Page 10 News List

TSMC posts third straight monthly high

SEMICONDUCTORS The chipmaker reported NT$22.519 billion in sales for last month and NT$64.87 billion for the second quarter, but analysts say the good times won't last

By Lisa Wang  /  STAFF REPORTER

Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電) yesterday said last month's sales hit a record high for the third straight month, but analysts said weaker-than-expected demand could herald a downturn for the semiconductor sector.

TSMC, the world's No. 1 contract chipmaker, said sales grew to NT$22.519 billion last month, a 26.7 percent increase from June last year. This figure represented a 3.7 percent-increase from NT$21.72 billion in May and marked the third consecutive monthly record.

"TSMC's wafer shipments for June continued to grow over May due to increased market demand," Lora Ho (何麗梅), chief financial officer at TSMC, said in a statement.

That brought the Hsinchu-based chipmaker's second quarter sales to a historic high of NT$64.87 billion.

"Undoubtedly, 2004 will be a bumper year for chipmakers. But, the high growth may end in the third quarter," said Alfred Ying, a semiconductor analyst with BNP Paribas Peregrine.

"Some early signs indicate computer demand may be disappointing, though demand for wireless communications looks strong," Ying said.

In addition, aggressive capacity expansion from TSMC, United Mircoelectronics Corp (UMC, 聯電) and Shanghai-based Semiconductor Manufacturing International Corp (中芯國際集成電路) will increase inventories and make it an issue, he said.

A few foreign investors have recently downgraded chipmakers' outlooks in reaction to a possible downturn.

Lehman Brothers analyst Tim Luke trimmed his forecast on Intel Corp's third-quarter profit to US$0.30 a share from US$0.31 on Wednesday. He cited "subdued" demand for personal computers.

TSMC and UMC were downgraded to "in line" from "out perform" by Goldman Sachs last month.

Benny Lo (盧志恆), an analyst at Primasia Securities, also said stock prices of TSMC and UMC weakened on the gloomy outlook for next year.

"The semiconductor industry looks fine in the short term, but it might suffer a downswing in the first half of 2005 at the earliest," Lo said.

TSMC shares have declined about 19 percent since reaching NT$65.5 in early January. The stock closed at NT$45 on the TAIEX yesterday after a 0.67 percent rebound.

"The third quarter will be better, compared to the second quarter, driven by strong demand from the consumer segment including DVD players. But, weaker- than-expected computer demand could weaken the growth in the last quarter," Lo said.

TSMC is expected to post higher earnings of NT$22.1 billion for the second quarter, an increase of 3.31 percent from NT$18.79 billion in the first quarter, according to Ying's projection.

UMC is expected to see a 10-percent growth to NT$7.5 billion in profits during the second quarter, from NT$6.8 billion in the first quarter, Ying said.

On Wednesday, UMC, the world's second largest made-to-order chip maker, posted a three-and-half year high for last month to about NT$10.32 billion.

That was a 6.87-percent increase from May.

In the second half, UMC will outpace TSMC in terms of sales growth after it formally incorporates SiS Microelectronics Corp's (矽統半導體) operations into its accounts this month, Ying said -- if UMC is able to maintain a 100 percent equipment utilization rate after the consolidation.

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