Taiwan Semiconductor Manufacturing Co (TSMC, 台積電 ), the world’s largest contract chipmaker, yesterday saw its share price falling the most in nearly a month after cutting its equipment budget as much as 27 percent amid slowing demand for chips and its first profit decline in three years.
Shares dropped 1.8 percent to NT$137.5 in Taipei, the steepest since Sept. 23. Its New York-listed depositary receipts lost 2.5 percent. Capital expenditure this year will be US$8 billion, from a previous forecast for as much as US$11 billion, chief financial officer Lora Ho (何麗梅) said on Thursday.
Third-quarter net income fell 1.3 percent to NT$75.3 billion (US$2.3 billion).
TSMC’s second cut in spending for plants and machinery this year comes after Intel Corp this week lowered its own outlook for capital expenditure and said a slowdown in server demand could threaten sales of its semiconductors.
While TSMC gets some chip orders to supply Apple Inc’s latest iPhone, those for other smartphones and personal computers are tepid.
“The surprise huge 2015 capital expenditure guidance cut also raises doubts about the 2016 order outlook: the cut affects 2016 installed capacity,” BNP Paribas SA Hong Kong-based analyst Szeho Ng wrote in a report after Thursday’s announcement.
TSMC sees zero growth in the global semiconductor industry this year after previously expecting a 3 percent increase, co-chief executive officer Mark Liu (劉德音) said on Thursday.
Global market revenue for smartphones is likely to climb 10 percent this year, while that for PCs is likely to drop 6 percent, he said. TSMC’s full-year revenue growth could reach 10 percent, he said.
“Due to a weaker global economy, a stronger US dollar environment and a volatile financial market, the electronic device market has been negatively impacted, resulting in a lack of growth,” Liu said.
“We see the unexpected slowdown of the economy in China since the first quarter, resulting in a continued sluggish smartphone demand economy,” Liu said.
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