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TSMC Q3 net profit up over 35% from previous quarter (update)

2017/10/19 18:29:41

Taipei, Oct. 19 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the world's largest contract chipmaker, said Thursday that its net profit for the third quarter of this year rose more than 35 percent from a quarter earlier on the back of the peak season effects.

In an investor conference, TSMC said its net profit for the July-September period rose 35.7 percent from a quarter earlier to NT$89.93 billion (US$2.98 billion) after its consolidated sales grew 17.9 percent quarter-on-quarter to NT$252.11 billion, surpassing NT$249 billion, which was the higher end of an earlier forecast range given by the company in July.

The third-quarter net profit, however, fell 7.1 percent from a year earlier, TSMC said.

The chipmaker said rising global demand pushed up shipments of chips made on its advanced 10 nanometer process, which accounted for 10 percent in the third quarter, up from 1 percent seen in the second quarter.

TSMC started mass production of the 10nm process in the fourth quarter of last year.

"The strength of our third-quarter revenue was driven mainly by major mobile product launches and generally healthy demand," Lora Ho (何麗梅), senior vice president and chief financial officer of TSMC, said in a statement.

"However, the strength of our third-quarter revenue was partially dampened by our customers' continued inventory management," Ho added.

In the third quarter, TSMC's gross margin stood at 49.9 percent, down from 50.8 percent seen in the second quarter, while its operating margin remained unchanged from a quarter earlier at 38.9 percent, the chip maker said.

TSMC said chips made on its 16nm and 20nm processes accounted for 24 percent of its total sales in the third quarter, while chips made on its 28nm process made up 23 percent of the total revenue.

Mark Liu (劉德音), president and co-chief executive officer of TSMC, told the investor conference that TSMC's sales for the fourth quarter are expected to range between US$9.1 billion and US$9.2 billion, up about 10 percent from the third quarter in U.S. dollar terms. It was the second quarter in which TSMC had given a U.S. dollar- denominated sales forecast in a bid to avoid currency fluctuations.

Liu said the 10 percent sequential sales growth for the fourth quarter will be driven by solid demand for chips made on its sophisticated 10nm process.

Due to higher shipments in the 10mn process, however, its gross margin for the fourth quarter is expected to fall from the third quarter to range between 48 percent and 50 percent, Ho said.

Ho said TSMC's capital expenditure for 2017 is expected to total US$10.8 billion, higher than an earlier estimate of NT$10 billion. She said capex is expected to make up 30 percent-35 percent of the company's total revenue over the next few years.

For the whole of 2017, Liu said, TSMC's sales could rise about 8.8 percent from a year earlier in U.S. dollar terms, beating a forecast 7-percent sales increase for the whole pure wafer foundry industry in the world.

Looking further ahead, Liu said the global semiconductor industry is expected to get a boost from solid demand for smartphones over the next few years.

Liu said the compound annual growth rate for sales in the global semiconductor business during the 2016-2021 period could hit 6 percent.

(By Jackson Chang and Frances Huang)