TSMC targets higher cash dividends

FRIENDS TO FOES::TSMC chairman Morris Chang said that he does not rule out the possibility of Intel Corp, which is a major TSMC customer, becoming a competitor

By Lisa Wang  /  Staff reporter, in Hsinchu

Wed, Jun 08, 2016 - Page 13

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said it would consider raising its cash dividend again next year, given its confidence on better operating profits this year.

TSMC’s shareholders yesterday approved a cash dividend of NT$6 per common share, the highest in two decades, after the company generated record-breaking net profit of NT$306.57 billion (US$9.48 billion), or NT$11.82 per common share, last year.

Last year, TSMC, which supplies chips for Apple Inc’s iPhones, distributed NT$4.5 per share in cash dividends, surpassing NT$3 per share over the eight-year period to 2013.

“I think there is a chance [to see that happening] next year,” TSMC chairman Morris Chang (張忠謀) told a media briefing, while answering a reporter’s question about whether the chipmaker will increase cash dividend next year.

“Our mission is to create better returns for company shareholders, regardless of weak macroeconomic conditions and a sluggish worldwide semiconductor industry,” Chang said.

Revenues in the global semiconductor industry is expected to grow at an annual rate of 2 percent or 3 percent this year and will probably grow at a similarly slow pace in the next five years, Chang said.

However, it has almost become the norm for TSMC to outgrow the overall semiconductor industry, based on its track record, Chang said, adding that he is confident about the chipmaker’s growth.

In January, Chang said that TSMC revenue and operating profit would grow 5 to 10 percent this year from last year.

Chang yesterday reiterated the forecast.

“My earlier forecast was pretty good,” Chang said. “The company’s business outlook is quite good in the second half.”

Commenting on intensifying competition with Samsung Electronics Co, Chang said: “The 7-nanometer process will be a very important battleground, where TSMC and Samsung will play leading roles. TSMC has some advantages.”

TSMC is competing with Samsung to get a bigger portion of orders from Apple.

Samsung is a very aggressive rival, Chang said, adding that he does not entirely rule out the possibility of Intel Corp becoming TSMC’s competitor in 7-nanometer technology.

“For now, Intel is one of TSMC’s major customers,” he said.

TSMC is scheduled to ramp up production of 7-nanometer chips in the first quarter of 2018, outpacing Samsung by about two quarters.

There are 20 customers in design engagement with TSMC for its 7-nanometer technology to make graphics processing units, chips used in game consoles, and network processors, the firm said.

Regardign the dispute on scrapping a ban on Chinese companies investing in Taiwanese chip designers, Chang said it would be fine to open up the sector to investment as long as the chip designers make sure their intellectual property is well-protected.

To safeguard Taiwanese intellectual property, Chinese investors should be restricted from taking seats on company boards and from taking any managerial positions, Chang said.

The same rules are applicable to chip packagers and testers, he said.

TSMC shares yesterday rose 0.62 percent to close at NT$162, retreating from a 16-year peak of NT$163.5 in the morning, boosting the company’s market value to a record high of NT$4.24 trillion.