Taiwan Semiconductor Manufac-turing Co (TSMC, 台積電), the world's largest semiconductor foundry, reported slightly better third-quarter profits than analysts expected. The firm's net profit dropped 94 percent from the same time last year to NT$1.24 billion (US$35.9 million).
Despite the steep year on year decline, the profit figure is an improvement over the previous business quarter and a sign the company is out of danger of losing money, analysts said. The company's chairman predicted more good news for the future, but warned against optimism over an industry turnaround.
"The fourth quarter will be better than the third quarter, but this is just a mild recovery," said TSMC Chairman Morris Chang (
TAIPEI TIMES FILE PHOTO
While analysts said TSMC's profits do not point to a revival in the IT industry, they do show the company's dominance in the chip foundry business.
Semiconductor foundries manufacture microchips for customers like Intel and VIA Technologies Inc (
Worldwide chip sales are expected to fall 32 percent this year to US$139 billion from US$204 billion last year due to sluggish sales of personal computers and other digital gadgets, said World Semiconductor Trade Statistics, a European industry group in a report earlier this week.
The downturn has hurt TSMC's competitors. Chartered Semiconductor (
"I think TSMC's performance is a surprise, and better than the market expected," said Henry Wang, electronics analyst at Entrust Securities Co (
TSMC's utilization rate, which tracks the amount of production lines actually churning out chips, has also stabilized after falling to a 41 percent low during the third business quarter. Chang said it would rise a few points in the fourth quarter.
Sales at TSMC rose by a slight margin quarter on quarter to NT$26.9 billion, but fell by 43 percent from last year. Last year at the same time, TSMC sales hit NT$47.5 billion. Despite announcing a massive new investment plan on Thursday, TSMC said it will cut spending on new plants and equipment. Although the company did not elaborate, Chang said planned expenditures of US$2.2 billion this year would not change.
TSMC plans to spend US$20 billion over an undefined time frame to build six state-of-the-art chipmaking facilities that carve chips out of 12-inch silicon wafers.
Worldwide, only six companies including TSMC have so far set up facilities to take advantage of this latest upgrade in chip manufacturing, which industry analysts say will save 30 percent off current production costs. The companies are Infineon, Intel, Samsung, Texas Instruments, TSMC and Taiwanese rival United Microelectronics Corp (UMC,
Analysts say this propensity to invest in the highest technology available is what has kept TSMC ahead. TSMC stock shares closed up 0.8 percent at NT$63 yesterday. The company's third quarter earnings were announced after the stock market closed.
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