Taiwan Semiconductor record ends

Taiwan Semiconductor Manufacturing Co (台積電), the world's largest supplier of made-to-order computer chips, said sales last month ended five straight record months even as its closest rival reported new monthly revenue highs.

Taiwan Semiconductor sales were NT$23.2 billion (US$683.9 million), compared with NT$18.9 billion in September last year, said Richard Chung (鐘奇諺), spokesman for the Hsinchu-based company. Sales fell from the monthly record of NT$23.4 billion set in August.

Customers have been reducing orders as inventories have increased. Semiconductor producers have reacted with "unprecedented speed" to reports in the second quarter of excess chip stocks, a report by the Semiconductor Industry Association, an industry group, said this week.

"The drop is a little bit of a surprise," said Alfred Ying, an analyst with BNP Paribas in Taipei. "We were expecting 1.5 percent growth compared with August."

Even so, United Microelectronics Corp (聯電), Taiwan Semiconductor's biggest rival, said sales last month rose to its third-straight monthly record.

Sales surged to NT$11.9 billion from NT$7.5 billion a year ago, the company said in an e-mailed statement. The previous record, set for August, was NT$11.5 billion.

The chipmakers count Texas Instruments Inc and other overseas manufacturers of chips used in mobile phones among their customers.

Texas Instruments Chief Executive Rich Templeton said last month that customer orders slowed primarily because of inventory adjustments.

Taiwan Semiconductor's factory use will decline from a peak in the second quarter because customers are cutting inventory, vice president Genda Hu (胡正大), 52, said in an interview.

Demand has softened during the past two months, chief financial officer Lora Ho (何麗梅) said in an e-mailed statement. A continued decline in demand would result in fourth-quarter sales falling from the third quarter, she said.

The company's factory use will probably drop to 97 percent by the fourth quarter because of weaker-than-expected demand for chips used in consumer and communications electronics, Ying said.

Taiwan Semiconductor said that demand exceeded its capacity during the second quarter.

"The inventory build has continued in the third quarter," said Dan Heyler, an analyst with Merrill Lynch in Hong Kong. "It's evidence that the fourth quarter could be softer."