Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) expects strong profits this year to allow it to raise employee bonuses by 30 percent annually, as well as provide an extraordinary bonus of NT$12,000 for each entry-level and medium-level employee.
The bonus hikes go against the grain of the nation’s long-term wage stagnation and the recent slump in the world’s economy.
The world’s top contract chipmaker attributed its upbeat prospects to the fast-growing uptake of mobile devices, including smartphones and tablets. It supplies chips for Apple Inc’s latest iPhone 6 series.
Photo: CNA
“We have grown [revenue] over the past three years. We grew 17 percent [annually] in 2012 and grew another 17 percent last year. This year, we may grow 27 percent,” chairman Morris Chang (張忠謀) told employees during the company’s annual sports day on Saturday.
“This year will be a good year for the company in terms of operation,” he said.
The Hsinchu-based chipmaker predicted earlier this month that revenue is set to grow to a record high this year — with estimates ranging from NT$757.29 billion to NT$760.29 billion (US$24.9 billion to US$25 billion) — from last year’s NT$597.02 billion.
It is expected to see an even bigger increase in net profits.
TSMC is expected to expand its net income by 32.39 percent this year to NT$249.09 billion, compared with NT$188.15 billion last year, Daiwa Capital Markets analyst Rick Hsu (徐稦成) said.
Hsu gave TSMC a “buy” rating and set its target price at NT$150.
Strong growth is set to allow TSMC to distribute 30 percent more bonuses this year than last year, Chang said.
Last year, TSMC issued NT$10.86 billion in employee bonuses.
The company plans to pay additional bonuses totaling NT$396 million to 33,000 employees, or 82.5 percent of its overall 40,000 workers.
It will be the second time it has distributed an extra employee bonus; the first was in 2012 as profits and revenue hit an all-time high.
Talking about industry competition, Chang reiterated that TSMC would regain its technology leadership in 2016 because the company’s market share of the advanced 16-nanometer (nm) technology is expected to outnumber its rivals by several percentage points.
However, it is expected to take a smaller share of the 16nm market than major rivals Intel Corp and Samsung Electronics Co next year due to slower ramp-up, Chang told a media briefing on Saturday.
On growing competition from China, Chang said it would take about two decades for Chinese rivals to catch up with TSMC and he considered Beijing’s recent plan to heavily subsidize Chinese semiconductor companies a business growth opportunity for his company.
“China’s catch-up will benefit TSMC. The Chinese government provides subsidies primarily to chip designers and almost all of those chip designers are TSMC customers,” Chang said.
TSMC counts Hisilicon Technologies Co (海思半導體), a mobile phone chip designing arm of Chinese telecoms equipment maker Huawei Technologies Co (華為), as one of its Chinese clients.
Over the past 10 years, TSMC has seen significant growth in revenue from the Chinese market, Chang said. China outpaced Japan several years ago to become an important revenue source almost equal to that of Europe, he added.
However, the company has no plans to invest in a new factory in China at the moment, he said.
TSMC already has an 8-inch chip factory in Shanghai.
Local rival United Microelectronics Corp (UMC, 聯電) announced earlier this month that it planned to invest US$1.35 billion in a joint venture with the Xiamen city government and Fujian Electronics & Information Group (福建電子信息集團) to make 55nm and 40nm chips in China.
In responding to a reporter’s question about the world economy, Chang said he expected the global economy to remain gloomy for several years, as growth in Europe, Japan and China has decelerated lately.
Taiwan would take its cue from those countries, as it depended on exports to those markets to grow, Chang said.
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