Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday forecast single-digit percentage growth in revenue this quarter — falling short of market expectations — after posting the lowest net profit in about one-and-half years last quarter.
TSMC, which supplies chips for Apple Inc’s iPhone series, expects growth momentum to magnify from next quarter as customers roll out new products, which are likely to help stimulate demand for its technologies used in high-end smartphones.
Revenue for the second quarter is expected to grow 6 to 7 percent to between NT$215 billion and NT$218 billion (US$6.63 billion and US$6.72 billion) this quarter, from NT$203.5 billion in the first quarter, the chipmaker said.
The growth rate is slower than the 9 percent sequential increase estimated by Credit Suisse Group AG analyst Randy Abrams and 13 percent growth predicted by HSBC Group PLC analyst Steven Pelayo.
Gross margin for this quarter is expected to rebound from last quarter’s 44.9 percent to between 49 percent and 51 percent on the back of rising demand for higher-margin 28-nanometer (nm) chips from low-end and mid-range smartphones, TSMC said.
“In the second quarter, headwinds are not much different from the first quarter. We see customers and even end-market demand increasing. [Customer] inventory restocking is still cautious,” co-chief executive officer Mark Liu (劉德音) told an investors’ conference, adding that the company would be closely monitoring the demand situation from month to month.
Due to macroeconomic uncertainty, Liu trimmed his revenue growth forecast for the worldwide semiconductor industry to 1 percent this year from 2 percent growth estimated three months earlier.
However, TSMC still aims to boost revenue by 5 to 10 percent annually this year, he said.
About 20 percent of this year’s revenue would come from its 16-nanometer chips, he added.
The company is retaining its capital spending budget at between US$9 billion and US$10 billion for this year, TSMC said.
Due to industry slowdown and a strong earthquake in February, TSMC said its net profit fell 18 percent to NT$64.78 billion last quarter, compared with NT$78.99 billion in the same period last year. That represented a quarterly decline of 11 percent from NT$72.84 billion, marking the weakest level since the second quarter of 2014.
The earthquake in southern Taiwan disrupted TSMC’s production lines in Tainan and reduced operating income by NT$7 billion last quarter, while cutting gross margin by 2.2 percentage points, TSMC said.
Commenting on the company’s progress in advanced technology development, Liu said TSMC expects to start volume production of 10nm chips in the second quarter next year and 7nm chips in the first half of 2018.
Twenty customers are intensively engaged with TSMC on the company’s 7nm technology, he said.
As to the next-generation integrated fan-out (InFO) packaging technology, co-chief executive officer C.C. Wei (魏哲家) said the company is to start volume production of InFO technology later this quarter.
The packaging technology is reportedly to be used in Apple’s new iPhones.
TSMC expects the technology to contribute US$100 million per quarter in revenue in the final quarter this year, Wei said.
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