Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday posted a record high quarterly net income, boosted mostly by robust demand for chips used in communications products.
During the quarter ending Sept. 30, net income grew 53.6 percent to NT$46.94 billion (US$1.52 billion), from NT$30.55 billion in the same period of last year, a more than 16 percent expansion from NT$40.28 billion in the -second quarter.
Looking forward, TSMC chairman and chief executive Morris Chang (張忠謀) said: “Business is continuing at a brisk level in the fourth quarter. There is still considerable demand that we can not schedule production for.”
TSMC said revenue would reach between NT$107 billion and NT$109 billion this quarter, down by between 2.9 percent and 4.67 percent from NT$112.25 billion in the third quarter. Citigroup analyst Roland Shu (徐振志) predicted a 6 percent decline in revenue on a quarterly basis.
Gross margin is expected to be between 48 percent and 50 percent this quarter, from last quarter’s 50 percent, TSMC said.
“Margin strength is a key surprise,” Credit Suisse analyst Andy Abrams said in a report released yesterday.
Abrams had expected gross margin to fall to 47 percent.
“Firm pricing, cost efficiencies and 40-nanometer yield improvement, which [is] now at corporate average margins, are driving the profitability gains,” he said.
TSMC’s forecast is based on the assumption that the New Taiwan dollar would appreciate to NT$30.6 against the US dollar this quarter.
Excluding the impact of a strengthening NT dollar, TSMC’s revenue would increase further to between NT$111.6 billion and NT$130.7 billion this quarter, -fueled by demand for chips made on advanced 40-nanometer technology, Chang said.
Revenue from chips made on 40-nanometer technology would account for 20 percent of the overall revenue this quarter, he said, up from 17 percent last quarter.
Next year, TSMC’s revenue is expected to outperform the global foundry industry, which is expected to grow 14 percent year-on-year, Chang said. The overall semiconductor industry is expected to grow 5 percent year-on-year next year by revenue, he said, citing a forecast from earlier this year.
TSMC will benefit from fast growth among its chip-designer customers, increasing production outsourcing from chipmakers that manufacture chips partly in-house and share gains in the new addressable markets such as micro-controllers used in consumer electronics.
To cope with the growth momentum, Chang said TSMC’s capital spending next year would be “greater” than this year, during which the company budgeted a record high expenditure of US$5.9 billion.
Abrams predicted TSMC would boost capital spending next year to US$7 billion, up 18.64 percent from this year.
Despite some analysts’ concern about overcapacity, Abrams said the massive capital spending would be underpinned by bullish forecasts about the chipmaker’s growth next year.
Separately, Chang told investors that the company hoped to pay cash dividends of NT$3 per share next year, meaning a cash dividend yield of 4.78 percent based on the stock’s closing price of NT$62.7 yesterday.
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