TSMC Beats Guidance With Record Q2 Sales

Mon, July 10, 2006

The world’s largest contract chip maker announced sales figures Monday that put it on track for its best quarter ever, and beat its guidance for the second quarter.

Sales for the three months that ended June 30 at Taiwan Semiconductor Manufacturing (TSMC) reached 81.23 billion new Taiwan dollars (US$2.51 billion), squeaking by its previous record of NT$81.16 billion, set in the fourth quarter of 2005.

TSMC also beat its sales guidance. The company had forecast second-quarter revenue at between NT$79 billion and NT$81 billion.

The second-quarter figure was arrived at by adding figures published by TSMC for sales in April, May and June. TSMC said its final sales total for the second quarter could be slightly different after certain factors are taken into account. A representative from the company did not elaborate. The company’s second-quarter investors’ conference, where it will announce its official earnings results, is slated for July 27 in Taipei.

The strong showing by TSMC normally encourages market watchers that the overall IT industry is humming along just fine. The company is a bellwether for the global tech industry because it produces chips on a made-to-order basis for a range of gadgets, including iPods, mobile phones, computers and game consoles.

But this time, analysts remain wary.

"The record high sales are a good sign TSMC is on a strong track," said Kenneth Lee, chip industry analyst at Primasia Securities in Taipei. But it does not soothe concerns that the global IT industry may be facing a slowdown in end demand for certain gadgets, he said. It can take months to produce certain kinds of chips, so if end demand does falter, the impact won’t be seen at a contract chip maker such as TSMC until after the fact. The company’s customers can’t cancel an order just because business conditions have worsened while the chips are being made.

"Inventory concerns remain," said Lee.

TSMC’s sales in June, NT$27.30 billion, made it the best month this year, and its third highest ever. The company’s highest monthly sales total ever was in November of last year, when its sales reached NT$27.52 billion.

The company declined to give a reason for its strong performance, saying it would have more to say during its second-quarter investor conference later this month.

-Dan Nystedt, IDG News Service (Taipei Bureau)

Check out our CIO News Alerts and Tech Informer pages for more updated news coverage.

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