TSMC 2015 earnings hit record high (update)

01/14/2016 06:46 PM
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TSMC Chairman Morris Chang (張忠謀)
TSMC Chairman Morris Chang (張忠謀)

Taipei, Jan. 14 (CNA) Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the world's largest contract chip maker, said Thursday that its earnings for 2015 were the highest in its 29-year history.

The company posted NT$306.57 billion (US$9.15 billion) in net profit for 2015, a 16.2 percent annual increase. TSMC's 2015 earnings per share was NT$11.82, compared with NT$10.18 the previous year, and its consolidated sales rose 10.6 percent to NT$843.497 billion, it said.

The chip maker said its net profit, EPS and consolidated sales broke all of its past records.

However, TSMC said, its gross margin for 2015 fell 0.8 percentage points from a year earlier to 48.7 percent.

Due to the record high in earnings, TSMC said that it is planning to dole out a higher cash dividend for 2015, compared with NT$4.5 per share for 2014. However, the cash dividend will not be finalized until a board meeting scheduled for February.

In the fourth quarter of 2015, the company's net profit dropped by a quarterly 3.3 percent to NT$72.84 billion due to inventory adjustments, it reported. The year-on-year drop in net profits for that quarter was 8.9 percent, it said.

The company's EPS in the fourth quarter of last year was NT$2.81, compared with NT$2.91 in the previous quarter.

In the October-December period, TSMC's operating profit stood at 38.3 percent, within the company's earlier forecast range of between 36.5 percent and 38.5 percent, while its gross profit hit 48.6 percent, also in line with an earlier estimate of 47.5 percent to 49.5 percent.

In the fourth quarter, TSMC witnessed sales from chips used in computing devices rise 5 percent from a year earlier, but sales from chips used in communications and consumer electronics devices fell 23 percent and 12 percent sequentially, respectively. The chip maker added that sales from chips used in industrial products remained flat in the fourth quarter.

TSMC said that chips made on its advanced 16 and 20 nanometer process accounted for 24 percent of the its total sales in the fourth quarter, up from 21 percent recorded in the third quarter, while chips made on its 28nm process made up 25 percent of the total revenue, down from 27 percent seen a quarter earlier.

TSMC is scheduled to launch commercial production of the even more sophisticated 10nm process in the fourth quarter of this year.

Morris Chang (張忠謀), chairman of the chip maker, said in an investor conference held Thursday that he has faith in TSMC's efforts to develop the 10nm process, and his company is expected to take a high market share soon after the technology begins mass production.

The chip maker also started development of the 5nm process a year ago and mass production is scheduled to begin in the first half of 2020.

Lora Ho (何麗梅), TSMC's senior vice president and chief financial officer, said that the company is expected to spend US$9 billion-US$10 billion in capital expenditure (capex) in 2016, up more than 10 percent from a year earlier.

Ho added that the 2016 capex will be used in the development of the 10nm process, integrated circuit packaging and testing and the establishment of a 12-inch wafer plant in Nanjing. The 12-inch wafer plant deal is pending regulatory approval from Taiwan.

According to Ho, TSMC's sales for the first quarter of this year could range between NT$198 billion and NT$201 billion, down only 1-2 percent from the previous quarter as a recovery in China's smartphone market is expected to offset the impact resulting from slow season effects during the January-March period.

TSMC President and Co-CEO Mark Liu (劉德音) said that sales in the global semiconductor sector are expected to grow 2 percent, and revenue of the world's contract chip industry could grow 5 percent year-on-year.

Liu said that TSMC is expected to continue to outperform the entire IC industry with its revenue likely to rise 5-10 percent in the year, adding that smartphone chips are expected to serve as a driver of TSMC's sales growth.

(By Jackson Chang and Frances Huang)


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