TSMC says momentum will continue, but analysts express doubts
By Faith Hung
Electronic Buyers' News
(10/20/00, 05:24:17 PM EDT)
TAIPEI, Taiwan -- Even though there are growing concerns that chip companies will have a tough time ahead, silicon foundry giant Taiwan Semiconductor Manufacturing Co. Ltd. said it is bullish about its prospect through the first half of next year.
Posting record earnings and sales in the third quarter, TSMC said on Thursday that its sales jumped 141% to $1.5 billion and earnings soared 227% to $627 million from the same period last year (see Oct. 19 story).
But TSMC's record results come at a time when a major customer, Motorola Inc., warned about its outlook in the fourth quarter and the full year of 2001. Altera Corp.--one of the top 10 customers of TSMC--was also downgraded earlier this month by Lehman Brothers and Salomon Smith Barney (see Oct. 10 story).
Still, TSMC remains undaunted. "We're having our best year ever and we expect the momentum to extend into the first half of 2001," chief financial officer Harvey Chang told institutional investors in a briefing Thursday. "There haven't been any customers indicating to us that they want wafer price reductions or that they'll cut their 2001 rolling forecast.This makes us confident our utilization will remain full in the months to come."
Some analysts, though, weren't so optimistic. As demand for PC and handsets is slowing down, fabless design houses or integrated device manufacturers (IDMs)-which account for 99% combined of TSMC's sales-will decrease their orders.
"With what's happening in the global market, we think TSMC probably can't keep its momentum," said analyst Eric Wang, head of regional semiconductor research with ABN AMRO Asia Ltd. in Taipei. He estimated TSMC's utilization next year will slide to 93% and 92% in 2002, compared with 107% in the third quarter.
Reflecting the concerns, TSMC's American depositary receipts (ADRs), which are traded on the New York Stock Exchange, have shed about half their value from an August high to Wednesday's closing of $17.625, nearing their 52-week low at $16.125, according to data from Yahoo finance.
In the third quarter, consumer products made up for 17% of TSMC's sales, rising from 12% in the second quarter, TSMC said. Communications fell to 33% from 39% and computers dropped to 35% from 36% during the same period.
Geographically, Japan posted the biggest sales increase, growing to 9% from 4%. North America fell to 63% from 69%, Europe was flat at 21% and Asia-Pacific rose to 7% from 6%.
TSMC's average selling prices for processed wafers rose to about $1,500 in the September quarter, jumping more than a fifth in the corresponding period last year, Chang said.
Gross margin climbed to 47% from 43% during the same period, citing more shipments of products using 0.18-micron technology, as well as the mergers of two units, he said.
For the year's first nine months, TSMC's net sales totaled $3.5 billion and net earnings were $1.4 billion, each accounting for 68% of the company's 2000 projections. |
