Thu, Jun 06, 2019 - Page 12 News List

TSMC says Huawei has reduced orders

TIGHT SPOT:The contract chipmaker said it would continue shipments to the Chinese smartphone vendor as long as they are in compliance with international trade rules

By Lisa Wang  /  Staff reporter, in HSINCHU

Taiwan Semiconductor Manufacturing Co chairman Mark Liu speaks at a news conference after the company’s annual general meeting in Hsinchu yesterday.

Photo: Ashley Pon/Bloomberg

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday warned that Huawei Technologies Co (華為) has cut orders, likely because of flagging demand for premium smartphones and higher inventory.

Washington’s trade sanctions on Huawei “will affect [TSMC] in the short term,” TSMC chairman Mark Liu (劉德音) told a news conference after the company’s annual shareholders’ meeting.

“The question is whether the market will accept a smartphone without Android,” he added.

Google has barred the Chinese technology giant’s access to updates of the Android operating system to comply with the US government’s trade regulations.

“Demand from Huawei has dropped so far this year,” Liu said.

He reiterated that TSMC would continue shipments to Huawei as long as its exports are in full compliance with international trade rules based on its due diligence reports.

The company has not received any requests from the US Department of Commerce for an inspection of its factories, Liu said, dismissing a report by the Chinese-language Economic Daily News earlier this week.

He also denied that the American Institute in Taiwan has sent investigators to probe its chip supply to Huawei.

Asked whether TSMC would accelerate capacity expansion at a new fab in Nanjing, China, Liu said that the company would boost capacity at the fab moderately this year as planned.

However, Liu avoided a question on whether the chipmaker was sticking to its forecast of mild revenue growth this year, saying that detailed financial figures would be released at an investors’ conference on July 20.

While US-China trade tensions have undermined chip demand worldwide because of weak consumer confidence and slowing macroeconomic growth, Liu said he remained confident that revenue growth would pick up in the second half of this year, underpinned by clients’ adoption of its 7-nanometer technology for high-end smartphones and 5G products.

TSMC would not rule out building a fab or seeking a merger-and-acquisition deal in the US, he added.

Shareholders approved a company proposal for a cash dividend distribution of NT$8 per common share, representing a payout ratio of 70 percent based on last year’s earnings per share of NT$13.54.

Shareholders also approved a proposal to distribute cash dividends on a quarterly basis, instead of once a year.

That would allow TSMC to distribute a cash dividend of NT$2 in the fourth quarter.

For the whole of this year, TSMC shareholders would receive a cash dividend totaling NT$10 per share.

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