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TSMC Q1 net profit down 9.6% sequentially (update)

2018/04/19 20:37:24

C.C. Wei (魏哲家)

Taipei, April 19 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, reported Thursday that its first-quarter net profit fell 9.6 percent from a quarter earlier, which market analysts attributed to the slow season effects.

While global demand for communication devices fell in the usually slow first quarter, TSMC benefited from increasing orders for its chips used in mining devices for Bitcoin transactions, which offset the slow season effects to some extent, analysts said.

TSMC posted NT$89.79 billion (US$3.05 billion) in first-quarter net profit, down 9.6 percent from the previous quarter, which was in line with market expectations. The first-quarter figure, however, was up 2.5 percent from a year earlier, company data showed.

Its earnings per share (EPS) for the January-March period stood at NT$3.46, compared with NT$3.83 in the previous quarter and NT$3.38 over the same period of last year.

TSMC's consolidated sales in the first quarter fell 8.2 percent from a quarter earlier to US$8.46 billion, which was within the company's sales guidance of between US$8.4 billion and US$8.5 billion.

Its first-quarter sales, however, were 12.7 percent higher than a year earlier.

In its reports, TSMC said sales generated from chips for computer production rose 30 percent from a quarter earlier, while revenue from chips for consumer electronics grew 9 percent, and sales from chips for communications and industrial products fell 19 percent and 4 percent, respectively.

"Our first quarter business was impacted by an unfavorable foreign exchange rate as the Taiwan dollar appreciated by 5.9 percent against the U.S. dollar over first quarter of 2017, as well as by mobile product seasonality," Lora Ho (何麗梅), TSMC's senior vice president and chief financial officer said in a statement.

Ho's comments confirmed market analysts' argument that strong demand for cryptocurrency mining helped TSMC moderate the mobile softness.

TSMC's gross margin in the first quarter stood at 50.3 percent, which was within the company's forecast of 49.5 percent to 51.5 percent, and rose from 50.0 percent a quarter earlier.

Looking ahead, Ho said at an investor conference that TSMC is likely to be affected by the continued weakness of the global smartphone market, and its second-quarter sales might range between US$7.8 billion and US$7.9 billion, down 7-8 percent from a quarter earlier.

The company's second-quarter gross margin is expected to fall below the 50 percent mark to between 47 percent and 49 percent, Ho said.

Market analysts had anticipated TSMC's second-quarter revenue would stay little changed from the first quarter.

Also at the investor conference, C.C. Wei (魏哲家), TSMC's Co-CEO, said the company has cut its 2018 sales growth forecast to about 10 percent, down from the 10-15 percent increase estimated in January.

Wei said the forecast was lowered on account of weakening smartphone demand and uncertainty over the cryptocurrency mining outlook caused by a recent plunge in the Bitcoin value.

TSMC has also cut its 2018 sales growth forecast for the global semiconductor sector, excluding memory chip production, to 5 percent from 5-7 percent, and lowered its prediction for sales growth of the global wafer foundry business to 8 percent from a previous anticipated rise of 9-10 percent, according to Wei.

He said the advanced 7 nanometer process, production of which started earlier this year, is expected to account for 20 percent of the chipmaker's sales in the fourth quarter of the year and 10 percent for the whole of 2018.

Meanwhile, Ho said TSMC's capital expenditure for 2018 is expected to range between US$11.5 billion and US$12 billion, higher than its previous forecast of US$10.5 billion-US$11 billion.

The annual capex could range between US$10 billion and US$12 billion over the next few years, which is expected to meet the company's needs to boost its revenue by 5-10 percent a year, she said.

(By Chang Chien-chung and Frances Huang)