Fri, Jan 13, 2017 - Page 12 News List

TSMC sees sales growth of up to 10%

INDUSTRY LEADER:The contract chipmaker is allocating US$10 billion for capital expenditure to develop more advanced 7 and 10-nanometer process technologies

By Lisa Wang  /  Staff reporter

Taiwan Semiconductor Manufacturing Co chairman Morris Chang, left, speaks at the company’s earnings conference in Taipei yesterday, as co-chief executive officer Mark Liu looks on.

Photo: Chien Jung-feng, Taipei Times

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) expects its revenue to grow by between 5 and 10 percent this year, outpacing the global semiconductor industry’s projected growth of 4 percent, company chairman Morris Chang (張忠謀) said.

Growth will be propelled mainly by the increasing use of semiconductors in smartphones and virtual reality devices, Chang said.

TSMC, which counts Apple Inc among its clients, expects a seasonal slowdown to affect its revenue in the first half of the year, as demand for mobile phone chips dwindles and a minor inventory digestion takes effect, Chang said.

That would translate into quarter-on-quarter revenue contractions, he added.

“Growth drivers are always customer demand. We do have more concentrated customers today than we did several years ago. So, those particular customers’ fluctuation affects our quarterly fluctuations to a great degree,” Chang told an investors’ conference in Taipei.

This quarter, revenue is expected to shrink between 8.86 and 10 percent to between NT$236 billion and NT$239 billion (US$7.4 billion and US$7.5 billion), compared with last quarter’s NT$262.23 billion, TSMC said.

That compares with Deutsche Bank AG analyst Michael Chou’s (周立中) forecast of a smaller decline of 6 percent.

Gross margin is expected to reach between 51.5 and 53.5 percent this quarter, compared with 52.3 percent last quarter, TSMC said.

The company reported a net income of NT100.2 billion, or earnings per share of NT$3.86, for last quarter.

Last year as a whole, net income expanded 9.03 percent from 2015 to a record NT$334.25 billion, while revenue jumped 12 percent to an all-time high of NT$947.94 billion.

TSMC attributed the growth to its leadership in advanced technologies, such as 16-nanometer and 20-nanometer process technology.

The company holds a 65 to 70 percent share of the global 16-nanometer chip market.

To safeguard its leadership, TSMC plans to allocate about US$10 billion for capital expenditure this year, especially for the development of 7-nanometer and 10-nanometer technologies.

The firm has more than 20 chip designer clients for its 7-nanometer technology, TSMC said, adding that it will have about 20 kinds of chips ready for shipment this year.

“This is the momentum we build on 7-nanometer. No other competitor has reached this stage in this cutting-edge technology,” TSMC co-chief executive officer Mark Liu (劉德音) said.

Asked whether TSMC is under pressure from clients to build a plant in the US in view of US president-elect Donald Trump’s “US first” policy, Chang said the company had not made any decision, but would “not rule out the option.”

As for the nation’s new labor law regulating work hours, TSMC spokesperson Lora Ho (何麗梅) suggested that the government increase the monthly limit on overtime from 46 hours to 54 hours.

The new rules have increased the company’s annual manufacturing costs by 0.3 percent, Ho said.

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