Fri, Jan 27, 2006 - Page 5 News List

TSMC posts record-high result

ROSY OUTLOOK The world's biggest contract chipmaker posted record-high earnings for the final quarter of last year and expects demand to continue this year


The world's biggest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), yesterday posted record-high earnings for last quarter, fueled by robust demand for chips used in most electronic devices including game consoles.

The stong demand from computer and consumer electronics makers would be sustained in the current first quarter, ensuring TSMC of a better than usual start to the year, the company said.

"We feel the first quarter will be a quite good period based on messages from our major customers," TSMC chief executive officer Rick Tsai (蔡力行) told the quarterly investor conference yesterday.

Good sales

"They will continue to place orders as they have pared down some inventories, helped by good sales in the last quarter," Tsai said.

TSMC makes chips for Texas Instrument Inc, the world's biggest maker of mobile phone chips, and NVIDIA Corp, the top computer graphic processor maker, among others.

TSMC said yesterday that fourth-quarter net income grew to NT$33.9 billion (US$1.37 billion), exceeding earlier estimates. That represented a 53-percent jump from NT$22.18 billion a year ago.

the final quarter result brought net income for last year to NT$2.91 billion, or NT$3.79 a share. Revenues for the final quarter also set an all-time high at NT$81.16 billion, the company said earlier this month.

During the conventionally slow first quarter, TSMC financial chief officer Lora Ho (何麗梅) said revenues would drop by between 6 percent to 10 percent from last quarter to fall in the range between NT$73 billion and NT$76 billion.

Gross margin would hold steady at around 48 percent this quarter, Ho told investors.

Despite the revenue decline, Tsai said the seasonal factor would have less impact on the company's operation than usual.

"We are having some difficulties in meeting our customers' demand," Tsai said.

Fully utilized

TSMC had all its factories fully utilized last quarter, but did not reveal the forecast for this quarter.

"TSMC's factory usage may slide in the first quarter based on the company's outlook, which is a little bit disappointing," said Eric Chen (陳慧明), an analyst with BNP Paribas Securities Co in Taipei.

Chen said he expected that utilization would go up by a single-digit percentage point this quarter.

That implied that the first quarter was not as strong as most analysts thought as utilization was a barometer for demand, Chen said.

In contrast to Chen's concerns, Tsai yesterday raised his forecast for the whole semiconductor industry for this year.

He predicted sales for the whole industry would expand at a maximum of 10 percent this year, higher than the 8 percent he estimated six months ago.

TSMC would record even stronger growth, Tsai said.

Based on that optimism, TSMC planed to hike its capital spending to as much as US$2.8 billion this year from almost US$2.5 billion for last year.

TSMC shares jumped 2.98 percent to NT$63.5 on Wednesday on the Taiwan Stock Exchange, compared to the 1.53-percent gain of the benchmark TAIEX index.

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