Taiwanese wafer foundries are expected to see their profitability rise on the rapid depreciation of the New Taiwan dollar against its US counterpart over recent months.
As major operators, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and rival Microelectronics Corp (UMC, 聯電) could benefit from such a trend, with analysts pointing to the fourth quarter of last year as a particularly bright spot for the two.
TSMC and UMC, the top-two contract chipmakers in Taiwan, are expected to see their gross margins improve about 0.4 percentage points for every 0.1 percent that the NT dollar depreciates against the greenback.
TSMC is the world’s largest pure foundry operator.
For the whole of last year, the NT dollar fell about 5.57 percent against the US dollar to close at NT$31.718 on Wednesday, the last day of trading.
Amid currency depreciation competition in the region, the central bank intensified its efforts to prop up the US dollar in Taiwan, particularly last month, allowing the Taiwanese currency to fall 4.21 percent against the greenback in the fourth quarter. That far outpaces TSMC’s early forecast of an about 1 percent fall.
In the third quarter, the NT dollar saw a 1.74 percent decline.
In addition to the the central bank’s intervention, hopes of a stronger US dollar after the US Federal Reserve’s end to its six-year quantitative easing program has further lifted the greenback.
Analysts said that the fall in the NT dollar has made Taiwanese-made chips cheaper, and to make things even better, TSMC and UMC are expected to rake in handsome foreign exchange gains in the fourth quarter.
The chip sector is not the only industry that has long hoped that the Taiwan dollar would fall further to strengthen its bottom line.
Taiwan Association of Machinery Industry chairman Hsu Hsiu-tsang (徐秀滄) said that he hopes that the local currency will fall further to test the NT$32.50 mark so that Taiwanese businesses can play catch-up after the heavy losses incurred by the depreciation of other regional currencies, in particular the yen and the won.
Machine tool makers expect that for every NT$1 the NT dollar depreciates against the US dollar, their gross margin can rise 1 percentage points, leaving some able to post about NT$40 million (US$1.26 million) in foreign exchange gains.
Despite the positive outlook, Goodway Machine Corp (程泰機械) chairman Edward Yang (楊德華) said he fears the yen will continue to fall against the US dollar to trigger another round in the regional currency depreciation war, threatening Taiwanese machine tool exporters.
Last month, the yen fell below the ¥120 mark against the US dollar at one point amid expectations that the Bank of Japan will keep pumping funds into the market to further weaken its currency.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”