Taiwan Semiconductor Co (TSMC, 台積電), the world's largest made-to-order chipmaker, reiterated yesterday that its operating performance has not worsened despite concerns in the financial market.
TSMC Chairman Morris Chang (
Chang meanwhile said that despite the semiconductor slump, the company will go ahead as scheduled with its decision to build four 12-inch wafer plants worth NT$500 billion in the controversial Tainan Science-based Industrial Park (
Several other semiconductor firms including Winbond Electronics Corp (
Tiffany Chen (
Chang told analysts last month during an institutional investor conference the company's capacity utilization ratio in the first quarter was 70 percent -- seen as an unimpressive figure in the high-octane world of chips.
The announcement triggered a flurry of downward earnings revision by analysts, which sent the stock tumbling, though it has recovered from the recent bottom.
"Nothing is changed and everything is in line with expectations," said Rich Hsu, research analyst with Nomura Securities (野村證券) in Taipei, who has just returned from a two-week road show in the US.
But not everyone is optimistic as analysts are now cutting estimates based on slowing global consumption, both in the retail and the corporate sector.
"We are modeling at below 70 percent in the second quarter -- because we think the situation has deteriorated," said Daniel Heller, a semiconductor analyst with Merrill Lynch's Taipei Branch.
But analysts say the utilization rate -- the company's total wafer shipments divided by capacity -- is not the only factor influencing earnings. A lot will depend upon the operating efficiency, product mix and profit margins at the semiconductor firms, they say.
Merrill Lynch expects that the semiconductor sector will decline by 2 percent this year -- a negative contraction -- after growing by a spectacular 35 percent last year.
After rebounding from recent lows, stocks plunged yesterday, led by TSMC and the United Microelectronics Corp (
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