TSMC posts record sales, again

Shares in Taiwan Semiconductor Manufacturing Co (台積電) rose yesterday after the world's largest producer of made to order chips announced that revenue last month reached a record monthly high.

The company rose 2.25 percent to NT$91 on trading of 27.9 million shares. The stock has lost almost a third of its value since the beginning of September.

Revenue for November rose 4.1 percent over the previous month, and 131.2 percent year-on-year, to NT$18.17 billion.

For the year to November, the company posted revenue of NT$148.04 billion, or 89.9 percent of its target for the year, which is NT$164.87 billion. The company posted revenue of NT$73.13 billion in 1999.

The firm's seventh successive monthly record came as no surprise to analysts, who anticipate another record figure for December. But as global demand for PCs and communications-related products wanes, TSMC's revenue figures will start to reflect this slowdown in the first quarter of next year, analysts said.

"November revenue refers to orders received in September," said Thomas Chen, a senior analyst at Polaris Securities Co.

The strong revenue figures for last month show that orders in September were still fairly strong. "If orders are down now, we'll see the effects of that in January or February next year," Chen said.

TSMC said yesterday that orders had remained "pretty strong" in the fourth quarter. However, it also acknowledged that the market is slowing.

"The overheated situation in the global semiconductor market is returning to a slower pattern," Chen Kuo-tzu (陳國慈), senior vice president at TSMC, said in a prepared statement. "However, the orders from our customers are still pretty strong in the fourth quarter of 2000," she said.

Over the past month, leading companies in the PC and communications industries have warned of lower-than-expected profits or high inventories as demand has fallen below expectations. Personal computer maker Apple Computer Inc's profit warning on Tuesday came a week after a similar warning from Gateway, the fourth largest PC maker in the US.

A third of TSMC's products go to computer-related companies, and another third goes to communications companies.

Meanwhile in Taiwan, companies selling PC-related products such as memory chips have reduced revenue targets as lower-than-expected demand has reduced market prices of such commodities. Memory chips make up about 12 percent of TSMC's sales.

"PC and communications companies are reducing their inventories, so they will reduce the number of chips ordered," Chen said. At the same time, "TSMC and United Microelectronics Corp are continuing to increase capacity, so their utilization rate will fall," he said.

United Microelectronics Corp (聯電), also a contract chip manufacturer, is TSMC's biggest competitor. UMC also reported record monthly revenue figures yesterday.

Revenue rose 267.76 percent year-on-year, and 1.4 percent month-on-month, to NT$10.86 billion, the company said in a statement. Shares in UMC rose 2.94 percent to NT$52.5 yesterday.

TSMC reported that the proportion of capacity used in the third quarter of the year fell to 107 percent, from 114 percent in the second quarter. Rumors circulating in newspapers and on Web sites have speculated that the company's utilization rate since then has fallen below 100 percent. TSMC denies this.