The Chinese arm of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) saw profit for last year fall due to sluggish demand for less advanced chips, according to information obtained by China Credit Information Service Ltd (CCIS, 中華徵信所).
Net profit for TSMC China, which is fully owned by TSMC, last year plunged about 30 percent to NT$6.09 billion (US$197.3 million at the current exchange rate), compared with NT$8.73 billion in 2015, CCIS said on Tuesday, citing the latest consolidated financial statement submitted by the world’s biggest contract chipmaker to the Taiwan Stock Exchange.
The decline marked the first annual profit contraction since TSMC China became profitable in 2010 after five years of operations, statistics compiled by CCIS showed.
TSMC China was a cash cow for TSMC, sending profits soaring since 2010, when it was granted a license to produce chips on 0.13-micron technology, an upgrade from 0.18-micron technology, CCIS said.
TSMC attributed the slowdown to a fall in demand.
“Demand for chips made by TSMC China dwindled last year. Revenue slid as a result,” TSMC spokeswoman Elizabeth Sun (孫又文) told Unique Satellite TV yesterday.
TSMC China operates an 8-inch fab in Shanghai.
China, the third-largest revenue contributor for TSMC, accounted for 9 percent of TSMC’s total revenue of NT$947.94 billion last year, up from 8 percent in 2015.
To produce chips better suited to the needs of Chinese customers, TSMC is building a 12-inch wafer factory in Nanjing, China, with a total budget of US$3 billion, the company said.
The Nanjing facility, which is to be wholly owned by TSMC, is expected to begin production of advanced 16-nanometer chips in the second half of next year, it said.
TSMC has a broad customer base that includes China’s Hisilicon Technologies Co (海思半導體), which is owned by Huawei Technologies Co (華為), and Spreadtrum Communications Co (展訊通信), as well as mobile phone chip suppliers MediaTek Inc (聯發科) and Qualcomm Inc.
TSMC shares rose 0.81 percent yesterday to NT$187, outdoing the TAIEX, which advanced 0.16 percent.
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