Taiwan Semiconductor Manufacturing Co (TSMC,
"The driving force is growing demand for wireless products like handsets as well as consumer electronics," said TSMC's chief executive officer Rock Tsai (蔡力行), who presided over his first investor conference after officially taking the helm of the company on July 1.
The foundry accordingly predicted its capacity utilization rate would keep rising to 90 percent in the July to September period from 85 percent in the previous quarter, and its gross margin to increase to between 41 and 43 percent from 39.7 percent.
"The upswing in the second half mainly depends on back-to-school demand in mid-August and September as well as Christmas holiday sales," said Wang Bou-li (
If the demand falls behind expectations, the stockpiling inventory issue could again haunt the sector, Wang said.
TSMC predicted the deteriorating average selling price (ASP) to continue with a drop of 3 percent to 5 percent in the third quarter from the second, when pricing declined by 5.4 percent sequentially, due to a higher-than-expected composition of mature-technology products.
To ease investors' concerns about the issue, Tsai said that the declining pricing was not unbearable and would improve in the second half of this year.
"We do not expect [the ASP] to go down further after the third quarter ... and pricing would become more stable in the fourth quarter," Tsai said.
TSMC yesterday reported second-quarter earnings of NT$18.37 billion (US$577 million), or NT$0.74 per share, up 9.2 percent from the first quarter but down 21.5 percent from a year ago, on net sales of NT$58.52 billion, up by 5.1 percent sequentially but also down by 10 percent year-on-year.
The chipmaker shipped 1.28 million wafers in the April to June quarter, up 14.5 percent from the previous quarter, and the utilization rate also increased to 85 percent, up from 78 percent, over the same period of time.
Looking ahead, products made with advanced 90-nanometer technology are expected to make up nearly 10 percent of revenue in the third quarter, up from a mere 2 percent in the second, and exceeding 10 percent in the fourth, driven by the rising demand for handset applications, graphics chips and DVD devices, Tsai said.
Despite TSMC's optimism, SinoPac's Wang said that the company was cautious about competition from smaller rival United Microelectronics Corp (
But the real worry is the government's restriction on manufacturing 0.18-micron chips in China, where design houses are experiencing soaring demand for such products, the analyst said, adding that it could eventually undermine TSMC and other Taiwanese chipmakers' competitiveness.
TSMC's Tsai conceded when answering investors' questions that despite the company's relatively strong level of technology, the government restrictions caused a geographic disadvantage against its Chinese counterparts, which have already started adopting 0.18-micron technology.
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