by CIO Staff

Communications Chips Help Drive TSMC Q2 Sales

Jul 27, 20062 mins
Data Center

Strong sales of chips for communications products and consumer electronics drove revenue at the world’s largest contract chip maker to an all-time high in the second quarter. The company also eased some fears over an inventory correction in the chip industry.

Taiwan Semiconductor Manufacturing (TSMC), a bellwether for the IT industry due to the variety of chips it produces, reported its revenue rose 37 percent year on year to new Taiwan $82.12 billion (US$2.50 billion as of June 30, the end of the three-month period being reported). The company’s net profit jumped to NT$34 billion from NT$18.97 billion.

TSMC’s previous revenue record was NT$81.2 billion, from the fourth quarter of last year.

The results beat expectations for a net profit of NT$32.9 billion, based on a survey of analysts polled by Thomson Financial. The revenue figure came in slightly above the company’s guidance.

TSMC forecast its revenue in the current quarter, July through September, will be between NT$79 billion and NT$82 billion, nearly flat from the second quarter. The figures were better than some analysts had predicted. Excess inventory in the chip market has caused fears of a downturn for chip developers.

“We believe this correction will be milder and more moderate than in 2004,” said Rick Tsai, president of TSMC, during the company’s second-quarter investors’ conference. Chip developers have learned how to better manage inventories in the few years since the last downturn occurred, he said.

But trouble in the chip industry will take a bite out of growth, TSMC said. The company forecast that chip industry revenue growth will likely come out at around 8 percent this year due to the inventory issue, the low end of an 8 percent to 10 percent range it gave earlier this year.

The company also said its spending on new factories and production equipment will likely be around US$2.6 billion this year, the low end of a US$2.6 billion to US$2.8 billion range it previously forecast.

-Dan Nystedt, IDG News Service (Taipei Bureau)

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