Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday said it would trim nearly 18 percent off capital spending this year after posting an annual decline of 22.5 percent in net income last quarter, as the sluggish global economy curtailed end demand for PCs and consumer electronics.
This year, TSMC plans to spend US$6 billion on new equipment and facilities, mainly on the most advanced 28 nanometer (nm) and 20nm technologies, less than last year’s record-high of US$7.29 billion, TSMC chairman and CEO Morris Chang (張忠謀) told an investors’ conference.
Deteriorating economic conditions, particularly in Europe, also prompted Chang to cut his forecast for world semiconductor revenue growth for this year to a 2 percent year-on-year increase, compared with the up to 5 percent annual expansion he estimated three months ago.
Photo: AFP
“We will perform better than the overall world semiconductor industry and foundry [contract chip manufacturing] industry this year,” Chang said.
In the semiconductor industry, mobile products would enjoy predictably strong growth and TSMC, which counts Apple Inc as a large indirect client, is well positioned in the mobile market with the right technology and capacity, he said.
Last quarter, the company’s net income fell to NT$31.58 billion (US$1.05 billion), compared with NT$40.72 billion in the same period of 2010, according to the company’s financial statement. On a quarterly basis, last quarter’s net profits -increased 3.9 percent from NT$30.40 billion in the third quarter.
The fourth-quarter results beat the expectations of some analysts. Samsung Securities analyst Warren Lau (劉華仁) and Credit Suisse analyst Randy Abrams projected TSMC would report NT$31.2 billion and NT$30.75 billion respectively, for the final quarter of last year.
The first quarter of this year, in terms of revenue, “is flatter than last year’s first quarter, but stronger than the seasonal average. The seasonal pattern in the last few years has been 4 percent to 6 percent lower than the fourth quarter” on the back of customers’ restocking in the seasonally slow season, Chang said.
“Another encouraging sign is that our booking forecasts indicate that our second-quarter revenue will be stronger than the first,” he added.
Revenue is expected to fall to between NT$103 billion and NT$105 billion this quarter, TSMC financial executive Lora Ho (何麗梅) said. That means a quarterly decline of 1.63 percent this quarter in the worst case scenario, compared with NT$104.71 billion last quarter, of which handset chips made up about 53 percent. At best, revenue is expected to grow 0.2 percent quarterly.
“The lead in ramping up 28nm technology is becoming a good driver for TSMC’s growth in the second half of the year, as more and more customers will migrate to this advanced technology to cope with growing demand for smartphones and tablets,” said Michael Chou (周立中), a semiconductor industry analyst with Deutsche Securities AG, Taipei.
“This quarter should be the trough for TSMC by revenue,” Chou said.
TSMC expects 28nm technology chips to account for 10 percent of the company’s total revenues in the third and fourth quarters. The chipmaker expects to complete 132 tape-outs of 28nm chips for customers this year after finishing 36 by the end of last year, Chang said.
In the semiconductor industry, tape-out is the last stage in chip design before entering volume production.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft