Feeds

TSMC sales soar on fab contracts

Not high enough for analysts, though

  • alert
  • submit to reddit

High performance access to file storage

Taiwan Semiconductor Manufacturing Co(TSMC) last week announced that sales in September reached a record monthly high. However the company's stock fell by almost the maximum limit as the market had been anticipating even stronger revenue figures, analysts said.

TSMC, the world's largest producer of made to order computer chips, said revenue in September rose 168.4 per cent over the same month a year ago to NT$16.39 billion. Revenue during the first nine months of the year totted up to NT$112.4 billion, up 127.4 percent on the same period a year ago.

Analysts and investors had been expecting revenue of over NT$16.50 billion in September, so weren't quite so impressed. TSMC's share price fell by 3.15 percent to NT$107.50 on the day the figures were release.

"The results were a little lower than expected because of the VIA problem," said Peter Wang, an analyst at Fubon Securities Co.

TSMC's September sales figures may have made a new monthly record, but they beat the August figures by less than two per cent. VIA is one of TSMC's major customers. "VIA had originally been very optimistic about chipset orders, but in September, its orders to TSMC were lower than expected," said Wang.

VIA, the world's second largest chipset designer, reported last week that revenue in September rose by over 250 percent compared with the same month a year ago, but fell seven percent month on month to NT$3.53 billion. VIA is the world's second largest chipset designer.

Besides reduced orders from major customers, TSMC may also have suffered from a slightly lower capacity utilization rate and less profitable product mix, analysts said.

K C Chen, senior vice president of TSMC, said in a statement that the company's capacity utilization rate remained full. The company was continuing to expand capacity aggressively to meet demand, she said.

But while sales may still be growing as the company expands capacity, there are signs that the utilization rate may be slightly lower than in previous months.

Fabless integrated circuit design companies are finding it easier to ask for capacity allocation, said Jessica Chang, semiconductors analyst at Nomura International in Taipei. "Two to three months ago, they had difficulty asking for more capacity," she said.

Their ability to obtain capacity allocation suggests a fall in TSMC's utilization rate. "A small decline in the utilization ratio might affect the degree by which TSMC is able to ask for a higher average selling price," said Chang. "The company says it's been raising its average selling price, but I think they've been under pressure not to increase the price," she said.

TSMC's revenues may also be suffering from a less profitable product mix. "Some communications companies pulled out some orders from TSMC," said Andrew Teng, semiconductors analyst at Taiwan International Securities Corp. TSMC said in mid-August that Motorola Inc, the world's no.2 cellular phone maker, had scaled back estimates of potential future order volumes because of lower than expected demand.

Communications chips have higher gross profit margins than PC chips, said Teng. As a result, revenue growth will rise more slowly. "Even though TSMC is running at 100 percent capacity, the product mix has changed, which pulls down the gross margin," said Teng.

Still, the company's fundamentals remain strong, analysts said, and its stock was suffering from the bearish market sentiment.

"We formally announced our annual sales and profits forecast on Sept 14," said TSMC's Tzeng. "The forecast so far is expected to be reachable." The company predicted revenue for the year of NT$164.87 billion, up over 125 per cent compared with revenue last year.

Revenue so far this year amounts to 69 per cent of that figure. ®

Related stories

Taiwan chip makers slam silent fab claims
VIA September sales: not so bad

High performance access to file storage

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.