Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday said it planned to end its policy of forced unpaid leave from next month as rush orders improve the rate of equipment use.
The decision came after TSMC raised its first-quarter sales and profitability forecast on March 10 thanks to rising rush orders, mainly from China, and the strengthening US dollar against the local currency.
“Recently, the furlough days have been gradually reduced because of rush orders. After considering business needs, the company has made the decision to terminate furlough,” TSMC chief executive Rick Tsai (蔡力行) said in a letter to TSMC employees yesterday.
On March 10, Citigroup adjusted upward its estimate of the equipment utilization rate at TSMC slightly to 35 percent this quarter, from a previous estimate of 34 percent, helped by rush orders.
To cope with the economic recession, which has curtailed spending on electronics, TSMC implemented stringent cost-saving measures, including requesting employees take unpaid leave beginning in December.
Employees were requested to take one-day of unpaid leave a week.
As there were no signs indicating a significant improvement in the global economic situation, TSMC would remain cautious and keep in place other cost containment measures that were announced on Dec. 3, the letter said.
United Microelectronics Corp (UMC, 聯電), TSMC’s rival, also said it would halt unpaid leave in the second half of this month and next month, the Central News Agency reported yesterday, without citing sources.
Last week TSMC said first-quarter revenue may increase to NT$38 billion (US$1.12 billion), up from its NT$35 billion estimated in January.
Gross margins may grow by 16 percent rather than the 5 percent it had estimated.
The upgrade may help TSMC reverse its previous forecast of quarterly losses for the first quarter amid the severe industrial slump as projected by some industry analysts, including Credit Suisse’s Randy Abrams. TSMC may post net income of NT$6.92 billion for the first quarter, rather than losses of NT$1.54 billion projected earlier, Abrams forecast.
Shares of TSMC and UMC fell by 3.05 percent and 5.05 percent to end at NT$47.7 and NT$9.22 respectively yesterday.
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