Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday reported that revenues last month fell to a 22-month low as chip demand shrank amid a global economic downturn.
Revenues last month dropped 12.9 percent month-on-month to NT$31.24 billion (US$1.04 billion), bringing the fourth-quarter figure down 1.66 percent quarterly to NT$104.71 billion, which is close to the upper end of TSMC’s forecast range of NT$103 billion to NT$105 billion.
Last month’s revenue, however, declined at a faster rate than the 9 percent monthly decrease projected by Randy Abrams, a semiconductor analyst with Credit Suisse.
“We believe customer inventory control at quarter end to keep [their] balance sheets intact and [a] year-end slowdown in customer operations drove the decrease,” Abrams said in a research note to clients.
In October, TSMC chief executive Morris Chang (張忠謀) told investors the increasingly uncertainty of future demand had continued to prompt its customers to reduce stock in the final quarter of last year, leading to the days of their inventories down to about eight days below seasonal levels.
TSMC produces chips for customers such as Broadcomm Inc and Qualcomm Inc, which supply chips to handset manufacturers and vendors including Apple Inc, HTC Corp (宏達電) and Nokia Oyj.
However, last month Chang said the “situation is not bad in terms of revenue and profitability. The fourth quarter will not be far from the third quarter.”
For the whole of last year, TSMC’s revenue hit a record of NT$427.08 billion, representing an increase of 1.8 percent from NT$419.54 billion in 2010.
Abrams expected TSMC to record a 5 percent quarterly decline in revenue to NT$98 billion this quarter.
TSMC is scheduled to give its business outlook for this year on Wednesday next week.
Abrams expected TSMC’s advanced 28 nanometer (nm) and 40nm technologies to run tighter into the first half of the year, driven by a communications and graphics rampup, providing a solid outlook for the blended average selling price.
The chipmaker is likely to spend between US$6 billion and US$6.5 billion on new equipment this year, down about 10 to 18 percent from the US$7.3 billion budgeted for last year, Abrams said.
He added that the latest projection was higher than the US$5.5 billion he estimated previously.
“The upbeat outlook from its leading-edge customers is triggering a bit more aggressive outlook to capital expenditures than a few months ago,” he said.
Credit Suisse maintained its “outperform” rating on TSMC. It also retained its target price of NT$79, implying 3.16 percent upside from the stock’s closing price of NT$76.50 yesterday.