Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is likely to report disappointing sales and operating margins in the fourth quarter and early next year because of uncertain demand and lower utilization rates, a brokerage in Taiwan said yesterday.
TSMC reported a 4 percent fall in third-quarter sales, better than the company’s guidance of a decline of 6 to 8 percent, aided by a weaker US dollar and last-minute orders in August from smartphone and CMOS sensor customers.
However, Barclays Capital cautioned in a research note that TSMC itself had reservations about expectations of a recovery in utilization rates starting in the second quarter of next year.
“We expect TSMC to guide for 4 percent and 7 percent quarter-on-quarter sales declines for the fourth quarter this year and first quarter next year, respectively, worse than consensus expectations of flattish sales,” Barclays Capital analyst Andrew Lu (陸行之) wrote.
Affected by the lower utilization rate, “our estimated operating margins of 29 percent for the fourth quarter this year and 26 percent for the first quarter next year [are lower than] consensus [estimates of] 30 to 31 percent,” the note said.
Because of the growing design complexity of new technologies, Lu expressed concern over whether TSMC would be able to derive 14 to 15 percent of its sales from 28-nanometer (nm) technology by the fourth quarter of next year, after a delay of two to three quarters in 28nm mass production.
Given that TSMC may invest US$5.5 billion to US$6 billion next year to gear up for the introduction of 28nm process technology, Lu wrote that TSMC could see its cost of plant and equipment depreciation rise faster than sales, causing further gross margin erosion.
Barclays retained its “equal weight” rating and target price of NT$63 for TSMC amid concerns over the company’s sales and earnings next year.
Shares of TSMC rose 1.3 percent to NT$70 yesterday on the Taiwan Stock Exchange.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by