Fri, Apr 14, 2017 - Page 12 News List

TSMC sees sales falling due to rising NT dollar

By Lisa Wang  /  Staff reporter

Taiwan Semiconductor Manufacturing Company president and co-CEO Mark Liu attends an investors’ conference in Taipei yesterday.

Photo: Tyrone Siu, Reuters

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said that revenue this quarter is likely to fall by 9 percent sequentially due to a rising New Taiwan dollar.

The chipmaker, which supplies processors for Apple Inc’s iPhones, said that the NT dollar’s average exchange rate vis a vis the US dollar could rise by another 2.1 percent to NT$30.50 this quarter, after climbing by 1.9 percent to NT$31.16 last quarter from NT$31.77 in the final quarter of last year.

Taking the foreign-exchange trend into consideration, TSMC said its revenue would decline to between NT$213 billion and NT$216 billion (US$7.02 billion and US$7.22 billion) this quarter, from last quarter’s NT$233.91 billion.

The guidance fell short of the NT$236.33 billion forecast by Daiwa Capital Markets analyst Rick Hsu (徐稦成) and NT$222 billion by Credit Suisse analyst Randy Abrams.

“The fluctuations in the NT dollar and US dollar exchange rate will have a sizable impact on our reported revenue and gross margin,” chief financial officer Lora Ho (何麗梅) told investors.

CURRENCY EFFECT

TSMC estimates that for every 1 percent rise in the NT dollar versus the US dollar, its revenue would drop by 1 percent and its gross and operating margins by 0.4 percentage points, Ho said.

A stronger NT dollar reduced its revenue by NT$6 billion last quarter, the chipmaker said.

Should the NT dollar’s average exchange rate against the greenback stay at the same level as the fourth quarter of last year, “our second-quarter revenue would be 4 percent higher than our guidance,” Ho said.

In US dollar terms, the company’s revenue would grow 12 percent year-on-year in the first half, outpacing the 10 percent growth TSMC estimated three months ago, co-CEO Mark Liu (劉德音) said.

Excluding the impact of foreign-exchange volatility, TSMC would see sales grow by 5 to 10 percent this year, Liu said.

The growth will be driven by a pickup in smartphone clients’ demand and a significant increase in sales of 10-nanometer wafers in the second half, the company said.

For this quarter, the company is forecasting a gross margin of between 50.5 percent and 52.5 percent, compared with 51.9 percent last quarter, and an operating margin of between 39 percent and 41 percent, compared with 40.8 percent a quarter earlier, Ho said.

Aside from the foreign-exchange factor, weak demand for a major smartphone client’s older models (likely Apple’s iPhone 7 series), inventory adjustment by fabless customer and slower smartphone demand in China could weigh on TSMC’s performance this quarter, Liu said.

Due to higher inventories in the semiconductor supply chain, Liu trimmed his growth forecast for global foundry companies’ revenue to 5 percent annually from his previous estimate of 7 percent.

In the first quarter, TSMC’s net profit fell 12.5 percent to NT$87.63 billion from NT$100.2 billion in the previous quarter, marking the worst period in three quarters.

That translated into earnings per share of NT$3.38, compared with NT$3.86 a quarter ago.

On an annual basis, net profit surged 35.3 percent from NT$64.78 billion in the first quarter of last year, or EPS of NT$2.5.

NO TO TOSHIBA

TSMC said that after evaluating the feasibility of buying the memorychip unit of debt-ridden Toshiba Corp, it has decided not to join the bidding as it sees limited synergy.

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