Profits at Taiwan Semiconductor Manufacturing Co (
TSMC said yesterday it had earned NT$312 million (US$9 million) in the second quarter. That's a steep drop from the NT$13.35 billion (US$384 million) it recorded in the same period last year.
Despite the lower profit figures, TSMC beat the expectations of many stock market analysts, who predicted the firm would lose money.
Company Chairman Morris Chang (
Despite the drop in orders, Chang said customers requiring TSMC's higher-technology manufacturing processes will push profits up each month through the rest of the year. He said the semiconductor industry "hit its lowest point during May and June."
Calvin Chang (
The fact the firm eked out a profit "is really saying that TSMC has a very, very low cost structure," the analyst said. "The break-even level -- which is a key parameter in the foundry business -- is significantly lower than its competitors'."
The semiconductor analyst said that the news from TSMC also indicates the chip industry bottomed out in the second quarter.
"The message is very clear ... we're through the bottom and we're heading up, although a very gradual up," he said.
Though the global chip market has slumped for almost a year, Taiwan Semiconductor Manufacturing Co has weathered the storm well.
The company yesterday turned a second-quarter profit at a time when many other chip firms around the world are posting losses.
"Sales in June were largely flat compared with May ... we think that must have been a bottom for us," TSMC Chairman Morris Chang said.
But TSMC isn't out of the storm yet. Some analysts remain skeptical about whether the semiconductor industry is turning around. They say TSMC could still post a loss.
Nevertheless, TSMC is pushing forward with capacity expansion projects and, unlike its competitors, has no plans to fire workers.
``Capex will stay at US$2.2 billion,'' Chang said. ``We have no plan to close any plants.''
One market watcher said US graphics chip designer Nvidia would be TSMC's savior in the third quarter.
Nvidia has designed graphics chips to be used in Microsoft's new Xbox video-game player. The US company has also created a graphics chipset from the same technology in order to bring its graphics power to desktop computers. Both products will be manufactured by TSMC.
Worldwide, TSMC is the only company of its kind still running at a profit. Its closest competitors, United Microelectronics Corp (
TSMC gained NT$1.50 yesterday to end at NT$60.50.
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