TSMC expects record profits this year

INDUSTRY EDGE::CEO Morris Chang was confident about the chipmaker’s prospects given its technology edge, but was cautious when asked about Taiwan’s outlook

By Lisa Wang  /  Staff reporter

Wed, Jun 12, 2013 - Page 13

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it expects to post record earnings this year, riding on the strong demand for smartphones and tablets.

“We are well-prepared [technologically] to embrace the high demand for mobile devices in the future,” TSMC chairman and chief executive officer Morris Chang (張忠謀) told shareholders.

TSMC is expected to see a threefold increase in production of 28-nanometer (nm) wafers this year compared with last year, Chang said.

The chipmaker also began testing chips using its 20nm system-on-chip technology in November last year, paving the way for volume production next year, Chang said.

The world’s biggest contract chipmaker counts handset chip designers Qualcomm Inc, Broadcom Inc and MediaTek Inc (聯發科) among its major clients in the communications segment, which accounted for about 50 percent of the company’s revenue last year.

Benefiting from its technological leadership, TSMC’s revenue and earnings per share hit all-time highs in 2011 and last year.

Asked if this year would be another record-breaking year in terms of revenue and earnings, Chang said: “I think so.”

TSMC’s net profit is expected to grow 18.53 percent to NT$197 billion (US$6.53 billion), or earnings per share of NT$7.6, this year, compared with NT$166.2 billion, or NT$6.41 a share, last year, JPMorgan said yesterday.

Revenue is likely to grow 23 percent to NT$621.7 billion this year, from NT$506.2 billion last year, JPMorgan said.

“I think [demand in] the third quarter will be quite good,” local cable TV network UBN quoted Chang as saying yesterday.

Though visibility in the fourth quarter is not clear, “the combined [figures] in the two quarters in the second half of the year will be better than that of the first two,” Chang said.

JPMorgan has an “overweight” rating on TSMC and raised its price target to NT$135 from NT$125.

Shareholders yesterday approved a company proposal to distribute a cash dividend of NT$3 per share based on last year’s net profit of NT$166.16 billion, or NT$6.41 per share. That translates into a dividend yield of 2.78 percent based on TSMC’s closing price of NT$108 yesterday.

Commenting on the economy, Chang said he did not expect a turnaround in the near term. He said Taiwan had the potential to grow its GDP by 5 percent annually, but he did not expect it to reach that level this year.

In other news, rival United Microelectronics Corp (UMC, 聯電) yesterday said it had set up a South Korean office in an effort to expand its regional business and provide local support to customers.

“We see this as a great opportunity to partner with [South] Korea-based IC companies as they can take advantage of UMC’s expertise in power management, display driver, touch-panel IC and leading-edge process technologies, as well as our flexible, collaborative foundry working model,” Steve Wang (王國雍), a vice president at UMC, said in a company statement.

UMC’s shareholders yesterday approved a proposal to distribute a cash dividend of NT$0.4 based on last year’s net profit of NT$7.82 billion, or NT$0.62 per share.

With the company’s stock closing at NT$13.50 yesterday, that represented a dividend yield of 2.96 percent.