An ongoing chip glut dampened the third-quarter profit at Taiwan Semiconductor Manufacturing (TSMC) by sending average selling prices down, but the company still reported record-high sales due to better-than-expected demand for computer-related chips.The world’s largest contract chip maker also said it remains pessimistic on chip demand for the next few quarters, but that over the long term it believes user demand will ensure steady growth for the global technology industry. TSMC is considered a bellwether for the IT industry due to the wide variety of products for which it manufactures chips, including PCs, mobile phones, iPods and other gadgets. Net profit rose 33 percent year on year to New Taiwanese $32.49 billion (US$981 million as of Sept. 30, the last day of the period reported), but the figure was down 4.4 percent compared to the second quarter, when it warned of a looming glut. Sales rose 17 percent over last year to NT$82.48 billion.Business will deteriorate in the fourth quarter for TSMC. The company forecast sales will drop to between NT$74 billion and NT$76 billion for the three months ending Dec. 31, as the chip glut worsens. The 8 percent to 10 percent drop from the third quarter is worse than market analysts had expected. “The [chip] inventory correction is in full force in the fourth quarter,” said Rick Tsai, president and chief executive officer at TSMC, during the company’s investor conference on Thursday. But “end demand still seems to be healthy,” he said.An oversupply of chips for mobile phones and other communications devices is hurting the chip industry and will take some time to work out, while a glut in computer chips is already easing, he said. Nomura Securities analyst Rick Hsu said, “This inventory correction is going to be a shallow one,” which is good news for the chip industry. But TSMC’s weak fourth-quarter sales guidance indicates the company is lowering prices to keep rivals from nabbing orders for advanced chips, he added. “The fourth-quarter decline is worse than we expected.”TSMC is so confident that chip demand will bounce back soon that it is planning to spend more money on new factories and production line equipment in 2007 than the US$2.6 billion it expects to spend by the end of this year. The company had originally forecast spending of between US$2.6 billion and US$2.8 billion for this year.“We remain positive on the mid-term to long-term semiconductor industry outlook as well as TSMC’s outlook,” Tsai said. He said the company would announce how much it plans to spend in 2007 early next year.-Dan Nystedt, IDG News Service (Taipei Bureau)Related Links: TSMC to Invest In, Share Tech With XinTec SMIC Widens Legal Battle With TSMC Countersuit TSMC: SMIC Violated Terms of ’05 SettlementCheck out our CIO News Alerts and Tech Informer pages for more updated news coverage. Related content opinion Website spoofing: risks, threats, and mitigation strategies for CIOs In this article, we take a look at how CIOs can tackle website spoofing attacks and the best ways to prevent them. By Yash Mehta Dec 01, 2023 5 mins CIO Cyberattacks Security brandpost Sponsored by Catchpoint Systems Inc. Gain full visibility across the Internet Stack with IPM (Internet Performance Monitoring) Today’s IT systems have more points of failure than ever before. Internet Performance Monitoring provides visibility over external networks and services to mitigate outages. By Neal Weinberg Dec 01, 2023 3 mins IT Operations brandpost Sponsored by Zscaler How customers can save money during periods of economic uncertainty Now is the time to overcome the challenges of perimeter-based architectures and reduce costs with zero trust. By Zscaler Dec 01, 2023 4 mins Security feature LexisNexis rises to the generative AI challenge With generative AI, the legal information services giant faces its most formidable disruptor yet. That’s why CTO Jeff Reihl is embracing and enhancing the technology swiftly to keep in front of the competition. By Paula Rooney Dec 01, 2023 6 mins Generative AI Digital Transformation Cloud Computing Podcasts Videos Resources Events SUBSCRIBE TO OUR NEWSLETTER From our editors straight to your inbox Get started by entering your email address below. Please enter a valid email address Subscribe