Wow, 40 percent utilization is incredible. Even I did not think it was that bad.
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TSMC cuts 2001 earnings estimate by nearly 75%
By Faith Hung
EBN
(09/27/01, 12:40:21 PM EST)
HSINCHU, Taiwan -- Taiwan Semiconductor Manufacturing Co. Ltd. has cut its full-year forecasts as hopes for a global recovery in the second half of the year fade away.
TSMC reduced its 2001 pretax profit target to $173.9 million, 72.9% lower than the projection it made in April. The sales forecast was revised down 18.2% to $3.5 billion.
The cuts came days after company chairman Morris Chang said that TSMC would probably miss this year's forecast as the terrorist attack on the United States dashes hopes for a fourth-quarter recovery.
“Given the anticipated substantial global market decline in the second half of 2001, the semiconductor industry did not resume its recovery as strongly as previously anticipated,” K. C. Chen, a senior vice president, said in a statement today, adding that the essential assumptions on which forecasts of unit shipment and average selling prices were based have changed.
TSMC isn't alone. Taiwan, one of the world's biggest suppliers of semiconductors, PCs, and electronics components, is suffering from slowing global demand. For the month of August, Taiwan exports totaled $11.41 billion, falling 16.7% on year, according to the latest figures from the Ministry of Economic Affairs. The situation is expected to worsen following the attacks on the United States, which consumes about 40% of the island's electronics and IT products, analysts said.
The decline in demand means that TSMC probably won't spend all of the $2.2 billion capex budget set aside for this year. “It's possible that we won't use up all of the money,” said a spokesman for the Hsinchu-based foundry. “Looking ahead, the capex will be less than $2.2 billion for 2002.” The company declined to disclose specific capital spending levels for this year or next.
Despite the shrinking capex, TSMC will remain focused on 300mm wafers. Its Fab 12, which is located in Hsinchu, is running test production on 0.15-micron process technology, the company said. The fab facility is slated to have an installed capacity of 4,500 wafers per month in the fourth quarter.
The shell of another 300mm wafer fab, in the Tainan science park, is almost complete, but plans to equip the plant have been delayed due to poor demand. Only about 40% of TSMC's production lines are being used, analysts said.
The revised earnings target indicates that TSMC expects to lose $16.2 million in the third and fourth quarters combined. The company posted net profits of $190.1 million in the first six months of 2001.
One of the major drags on TSMC's forecast is its Vanguard International Semiconductor Co. unit, which now expects to lose $177.6 million for the year because of plunging DRAM prices, analysts said. |
