TSMC Sales, Margin Forecasts Beat Estimates on Mobile-Device Chip Demand

 Published: 1/18/2012 8:01:04 AM GMT
Original Cached

Taiwan Semiconductor Manufacturing Co. (2330), the world’s largest contract manufacturer of chips, forecast sales and profitability exceeding analyst estimates as customers rebuild inventories in anticipation of rising demand.

Revenue this quarter will be NT$103 billion to NT$105 billion, the Hsinchu, Taiwan-based company said in a statement today, compared with the NT$100 billion average of 13 analyst estimates compiled by Bloomberg. TSMC reported a 23 percent drop in fourth-quarter income today, the third consecutive decline, to NT$31.6 billion.

TSMC is benefiting from demand for mobile devices such as HTC Corp. handsets and Apple Inc. iPads as clients including Qualcomm Inc. and Broadcom Corp. (BRCM) renew orders during the industry’s low season to replenish inventories. Spending by TSMC this year will be less than last year and fall short of analyst estimates as the company focuses on technology advancement instead of expanding capacity.

“First-quarter strength is mainly due to refreshing depleted inventory levels,” Chairman and Chief Executive Officer Morris Chang, 80, told investors today. “The bookings forecast for second quarter indicates that demand is also rising.”

Fourth-quarter net income was in line with the NT$31 billion average of 18 analyst estimates compiled by Bloomberg. Consolidated revenue, reported earlier, dropped 5 percent from a year prior to NT$104.7 billion, in line with analyst estimates and at the top end of company guidance for NT$103 billion to NT$105 billion.

Gross margin, a key measure of profitability that tracks sales less the cost of goods sold, will be 42.5 percent to 44.5 percent this quarter, ahead of the 42.1 percent median of six analyst estimates compiled by Bloomberg News. TSMC also forecast an operating margin, which accounts for sales minus operating costs, exceeding analyst estimates.

TSMC, which manufactures chips used in iPads and Dell Inc. computers, will cut its equipment budget to $6 billion this year from $7.3 billion last year as a slowing global economy prompts the company to focus on producing more advanced chips rather than on expanding capacity.

The median of five analyst estimates compiled by Bloomberg News is for TSMC to spend $6.2 billion this year.

Qualcomm, the largest maker of mobile-phone chips, in November forecast stronger 2012 sales than analysts estimated as demand for mobile devices drives demand for semiconductors. Broadcom, another TSMC client that designs chips used in TV set- top boxes, said last month that fourth-quarter revenue was “coming in stronger than expected.”

“Customers were overcautious, so inventories got too low,” said Dan Heyler, a Hong Kong-based analyst at Bank of America Merrill Lynch. “We can see now that business is stabilizing, and we’re in the early stages of a recovery.”

Chang cut his global semiconductor market-revenue growth forecast today to 2 percent, from an earlier estimate of 3 percent to 5 percent next year. The industry had zero growth last year, while the custom-manufacturing segment climbed 4 percent and TSMC 9 percent, Chang said.

TSMC benefits from growth in mobile devices, with every tablet device sold globally contributing about $7 to its revenue, he said April 28.

 4Q 1Q Company Company Analyst Company Analyst Actual Guidance Estimate Guidance Estimate Sales NT$bln 104.7 103-105 104.3 103-105 100 Gross Margin% 44.7 43.5~45.5 44.6 42.5~44.5 42.1 Op Margin % 31.4 30~32 32 28.5~30.5 29.2 Source: TSMC, Bloomberg News 

To contact the reporter on this story: Tim Culpan in Taipei at [email protected]

To contact the editor responsible for this story: Michael Tighe at [email protected]

More Stories On

TAG CLOUD Tags Cloud

Get Adobe Flash player

Previous Next
News in Pictures

Celebrate the Year of the Dragon

Michael Jackson honored in Los Angeles

ShowBiz Minute: Moore, Jackson, Pitt

Raw Video: Kim Jong Un visits North Korea school

Exiled Tibet leader urges action on China violence