Semiconductor Value Chain

TSMC Forecasts Q4 Dip

16 October 2013

Leading semiconductor foundry Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) Thursday (Oct. 17) reported record sales and profits for the third quarter, but said it expects fourth quarter sales to be down 10.5 percent sequentially.

At the same time, TSMC Chairman and CEO Morris Chang raised his guidance for the global semiconductor market to 4 percent, up from 3 percent, attributing the increase mainly to the strength of the memory chip market.

TSMC (Hsinchu, Taiwan) announced net income of NT$51.95 billion (about $1.77 billion) on sales of NT$162.58 billion (about $5.53 billion). Third quarter revenue was up 4.3 percent sequentially and increased 14.9 percent compared with the third quarter of 2012. The sequential increase was lower than seasonal norms, but came in line with previous guidance.

"The third quarter was a record quarter for TSMC both in terms of revenue and EPS [earnings per share]," Chang said in a conference call with analysts to discuss the results. "In a period when sales of certain mobile products were slowing, we are pleased with the results."

Chang said TSMC's greater-than-seasonal sequential drop in sales would be due to declining demand for certain high-end smartphones and a previously forecast inventory correction that is affecting the mobile sector. However he added that the weakness would be temporary and forecast double-digit percentage growth for TSMC in both 2013 and 2014 largely due to its leading position in advanced process technologies.

Chang said that while he expects the global semiconductor market to rise 4 percent in 2013, TSMC believes the fabless segment will see growth of 9 percent and the foundry segment will do even better at 11 percent. TSMC is expected to outperform the broader foundry segment and achieve annual growth of 17 to 18 percent, he said.

Shipments of 28-nm wafers accounted for 32 percent of TSMC's third quarter sales, up from 29 percent in the previous quarter.

TSMC predicted that its fourth quarter sales revenue would be between NT$144 billion (about $4.9 billion) and NT$147 billion (about $5.0 billion). At the mid-point, this would a sales decline of about 10.5 percent.

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