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Taiwan Semiconductor hits low end of target

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest chipmaker on contract basis, yesterday said first quarter revenues jumped around 35 percent at an annual rate to NT$87.48 billion (US$2.89 billion), hitting the low end of the company’s revenue target.

On January 31, TSMC said revenues may fall in the range of NT$87 billion to NT$89 billion during the first three months.

On a quarterly basis, the first quarter results represent a 7 percent drop from a record NT$93.86 billion in the final quarter of last year.

TSMC chief executive Rick Tsai (蔡力行) said in January that inventories on most customers would recover to a normal level last quarter and he held a positive view about the semiconductor industry in the middle to long term as customers were more cautious about inventory control.

“Caused by waferbank adjustment by key communication and graphic customers, TSMC reported a sales decline of 7 percent in March month-on-month, [which] is worse than most of supply chain vendors,” said Citi Group analyst Andrew Lu (陸行之) yesterday in a note to customers.

TSMC is expected to report NT$1.05 per share in earnings for the first quarter, but there could be a chance of a miss because of foreign exchange losses, Lu said.

Since TSMC customers may continue to adjust their waferbank in the next few months, Lu expects the chipmaker to forecast a 1 percent to 4 percent drop in revenues and flat gross margin for the second quarter on April 29.

Lu maintain a “hold” rating on TSMC with target price at NT$61, citing lack of catalysts and the risk of a demand downturn in the second and third quarters.
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