The nation’s two largest contract chipmakers, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and United Microelectronics Corp (UMC, 聯電), yesterday posted better-than-expected revenue for last quarter as robust demand for advanced chips offset seasonal weakness.
TSMC’s revenue grew 6.45 percent sequentially to another record-breaking NT$222.53 billion (US$6.97 billion) for the quarter ending on Dec. 31, surpassing the chipmaker’s forecast of between NT$217 billion and NT$220 billion.
“We retain our mid-single-digit revenue growth forecast for the fourth quarter, thanks to contribution from Apple Inc’s application processor and companion chips,” CIMB Securities Ltd Taiwan head of research Eric Lin (林育民) said in a report released on Monday.
Most analysts expected TSMC’s revenue to fall within the company’s forecast range. Lin predicted TSMC would see a revenue of NT$219.4 billion last quarter, while Goldman Sachs analyst Donald Lu (呂東風) and JPMorgan Securities Ltd analyst Gokul Hariharan on Thursday predicted that TSMC would post NT$218.98 billion and NT$218.1 billion last quarter, respectively.
TSMC co-chief executive officer Mark Liu (劉德音) told investors in October last year that “strong demand from our 20-nanometer (nm) system-on-chip customers enabled our continued growth in the fourth quarter, overcoming our typical pattern of a sequentially weaker fourth quarter because of seasonal demand.”
Last year, TSMC saw its revenue jump 27.8 percent to NT$762.81 billion from NT$597.02 billion in 2013. The chipmaker said in October that annual revenue would expand by a double-digit percentage last year and this year, driven primarily by maintained demand for its 28nm and 20nm chips for smartphones.
UMC yesterday posted NT$37.24 billion in revenue for last quarter, up 5.77 percent sequentially from NT$35.21 billion. The figure beat Goldman Sach’s estimate of NT$36.74 billion.
“We believe that 8-inch [chip] demand has remained solid while 12-inch [chip] demand is showing seasonal weakness,” Lu said in a report.
However, Lu said:“our foundry customer supply chain checks have discovered that TSMC and UMC have asked them to pull in orders to avoid a potential capacity shortage in the second quarter.”
Lu retained his “buy” rating on TSMC and “neutral” rating on UMC. Lin and Hariharan also kept their “add” and “overweight” ratings on TSMC.
In Taipei trading yesterday, TSMC shares fell 2.9 percent to close at NT$134 after both BNP Paribas and Credit Suisse downgraded their ratings on TSMC. Analysts at the two brokerages said they feared that TSMC would not be able to stave off stiff competition from its rivals as it tries to secure orders from Apple for production of the US firm’s next-generation processor.
The decline in TSMC share price pushed down the electronics sector by 0.68 percent yesterday and the semiconductor sector by 1.64 percent at the close, although UMC shares managed to buck the downtrend by rising 1.34 percent to close at NT$15.10 on the Taiwan Stock Exchange.
Shares in MediaTek Inc (聯發科) also withstood the market’s downturn, gaining 0.62 percent to NT$488.00 after the company said it hit sales target for the fourth quarter of last year.
MediaTek, which supplies handset chips to Chinese handset makers such as Xiaomi Corp (小米), yesterday posted 1.8 percent growth in consolidated revenue for last month to NT$17.08 billion from November’s NT$16.77 billion.
That brought MediaTek’s revenue last quarter to NT$55.45 billion, well within the firm’s forecast range of between NT$54 billion and NT$58.6 billion.
MediaTek’s revenue last quarter, though down 3.51 percent from NT$57.47 billion in the previous quarter, is higher than the NT$54.72 billion estimated by JPMorgan analyst Alvin Kwock (郭彥麟).
Kwok retained his “overweight” rating on MediaTek with a target price unchanged at NT$600.
For the whole of last year, MediaTek posted a 56.6 percent annual increase in consolidated sales to NT$213.06 billion, breaking the NT$200 billion mark for the first time.
The significant annual growth was attributed not just to strong smartphone chip shipments, but also to MediaTek’s acquisition of competitor MStar Semiconductor Inc (晨星半導體) in February last year.
Additional reporting by CNA
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