Taiwan Semiconductor Manufac-turing Co (台積電), the world's largest contract chipmaker, yesterday announced weaker-than-expected second-quarter earnings and said the third quarter would be worse, heaping more bad news on the nation's battered stock market.
But company chairman, Morris Chang (
At yesterday's investors' conference, Chang also said TSMC will establish an audit committee to boost corporate governance to prevent an Enron-like accounting scandal from tearing his company asunder.
"This year, the worldwide semiconductor industry may end up as bad as last year, but [TSMC] will still see growth," Chang said.
The company's second-quarter profits reached NT$9.3 billion, which represents record year-on-year growth for the company but is far short of analysts' estimates. Sales increased to NT$44.2 billion, a 68 percent increase over last year.
"[TSMC's] profit is a big disappointment," said Chris Hsieh (
The company blamed a higher-than-expected tax rate and some investment losses for the missed profit targets.
Another analyst predicted that without another strong performance in the US stock market overnight, TSMC's negative third-quarter outlook could spark a massive sell-off on the local bourse today, as the firm is a major component of the TAIEX.
Yesterday, the Dow Jones Industrial Average had its second biggest one-day point gain ever, rising 488.95 points -- or 6.3 percent -- to end at 8,191.29. Before that, a two-week slide had erased nearly a quarter of its value.
TSMC's chairman predicted sales in the third quarter would be weaker than the second, as average selling prices drop 5 percent and the depreciation of the US dollar reduces its profit margin by 2.2 percent.
To battle the slide, TSMC will slash spending on new plants and equipment from the US$2.5 billion announced earlier this year to "below US$2 billion," he said.
Despite predicting a tough third quarter, Chang underlined his confidence that the world economy is recovering.
"I strongly believe that the recovery is here and that what we're seeing now is just a pause," he said, projecting the breather in growth would last for three to six months.
He also said demand for communications chips used in mobile phones and wireless LAN equipment and chips for consumer electronics gear such as digital cameras and DVD players is on the rise.
To ensure his company does not fall prey to the accounting scandals that torpedoed US companies such as Enron and Worldcom, Chang also said TSMC will name three or four people to an audit committee designed to keep company books clean -- even though Taiwan has no laws requiring companies to do so.
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