Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s top contract chipmaker, yesterday said its net profits surged 31.58 percent last quarter from a year ago backed by robust demand for chips used in smartphones and other communications products, a result that beat most analysts’ expectations.
Net income expanded to NT$41.57 billion (US$1.43 billion), or NT$1.61 per share, last quarter, compared with NT$31.58 billion, or NT$1.22 per share, in the same period of 2011.
The figure is better than that forecast made by most analysts, including Randy Abrams of Credit Suisse, who projected TSMC would make NT$41.42 billion, or NT$1.59 a share.
On a quarterly basis, the figure represented a decline of 15.07 percent from NT$49.3 billion, or NT$1.9 per share, in the third quarter.
TSMC said a supply chain inventory correction was the main cause of the reduction in demand for its chips and its net profits last quarter compared with the previous quarter. For this quarter, TSMC forecast a milder-than-expected decline in revenue as inventory adjustment is likely to be less drastic than the chipmaker forecast three months ago.
“Because many mobile product manufacturers have accelerated their new product launches this year, they need IC supply and IC inventory earlier,” TSMC chairman and chief executive Morris Chang (張忠謀) told an investors’ conference in Taipei.
“Supply chain inventory is now forecast to decline only slightly from the fourth quarter through the first quarter,” Chang added.
Supply chain inventory will drop slightly to four days above the seasonal average this quarter from six days above the seasonal average last quarter, rather than a dramatic contraction from seven days above seasonal average to one day below the seasonal average, Chang said.
“Now we expect first-quarter revenue to be essentially flat in US dollar terms from the fourth quarter ... There will be a [less strong] rebound in the second quarter [than the company thought three months ago],” he said.
New Taiwan dollar revenue will drop by between 1.76 percent and 3.28 percent to between NT$127 billion and NT$129 billion this quarter, compared with NT$131.31 billion last quarter, because of fewer working days and machine maintenance off days, TSMC said.
Gross margin is expected to shrink to as low as 43.5 percent this quarter from 47.2 percent last quarter, the company forecast.
The revenue contraction is smaller than the flat to 5 percent quarterly reduction estimated by UBS analyst Jonah Cheng (程正樺) and Abrams’ estimate of a 5 percent decline.
“As smartphone manufacturers, such as Samsung, HTC (宏達電) and Sony, are prepared to launch new products mostly during the Mobile World Congress [from Feb. 25 to Feb. 28] ... the problem now is how to build as much inventory as they can to avoid the supply constraints experienced previously, rather than how to reduce inventory,” Cheng said.
For the whole year of this year, Chang expects 28-nanometer technology to be the main driving force for the company’s revenue, exceeding the 7 percent annual expansion he forecast for the foundry sector.
Last month, Chang said the company is aiming to grow its revenue by between 15 percent and 20 percent this year from last year’s NT$506.25 billion.
Revenue contribution from 28-nanometer chips this year is likely to surpass TSMC’s previous forecast of 30 percent growth as the company plans to triple its capacity this year from last year, Chang said. Last year, 28-nanometer chips accounted for a 12 percent share.
TSMC said capital expenditure is set to increase to US$9 billion, compared with a record level of US$8.32 billion last year.