Chip Maker TSMC Sees Sales Drop
Thursday August 8, 6:21 AM EDT
By Baker Li
TAIPEI (Reuters) - Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, reported on Thursday its first drop in sales in five months -- in line with market expectations for a tough third quarter.
Sales at TSMC fell 13.3 percent to T$13.5 billion (US$397 million) from June, the first month-on-month drop since February. From a year earlier, sales were up 57.3 percent.
TSMC's revenues have risen steadily since bottoming out in the middle of 2001 during the semiconductor industry worst-ever slump.
But after months of recovery, the company rattled investors two weeks ago by warning of a downturn in July to September, a key quarter that kicks off the year-end export peak period to meet holiday demand in the United States, Europe and Japan.
In a statement, TSMC spokesman Harvey Chang attributed the month-on-month fall to "a decrease in unit sales and a change of product mix." He did not elaborate.
The July sales were in line with market forecasts but failed to dispel concerns that a recovery in the chip sector will take longer than thought just weeks ago as the U.S. economy slows.
"The sales figures were within our expectations. But, we still don't have a clear picture for the fourth quarter for the semiconductor industry," said Joyce Hsu, a technology analyst at SinoPac Securities.
ASIAN CHIP SHARES ON EDGE
Asian semiconductor shares tumbled this week following a drop in prices for microprocessors, the brains of personal computers, and for the memory chips used in PCs. Growing worries over the outlook for the U.S. economy have added to the unease.
Fears of a double-dip recession in the United States -- Taiwan's largest customer -- were fanned this week by U.S. service sector data that also ignited hopes of a further credit easing by the U.S. Federal Reserve.
Shares in TSMC, which is 21.7 percent owned by Europe's largest consumer electronics group, Philips Electronics NV, fell 0.41 percent to T$49.10, in-line with a 0.43 percent fall in the benchmark TAIEX index.
The results were released after close of trading.
TSMC's stock has shed some 45 percent since a year high of T$88.64 in early April, almost double the 25 percent fall on the big board during the same period.
At its quarterly investors briefing two weeks ago, TSMC said second-quarter earnings were hit by falling demand from makers of graphics chips, personal computer chipsets, and games.
The company has said it expected third-quarter shipments to drop by a single-digit percentage from the second quarter and average selling prices to fall five percent.
Responding to worsening conditions, TSMC also cut this year's spending on new equipment to less than US$2 billion from an earlier US$2.6 billion budget.
Earlier in the day, memory chipmaker Powerchip Semiconductor slashed its 2002 pre-tax profit target by 88 percent to T$578 million due to a weak economic recovery. Powerchip was the latest local tech firm to cut its earnings forecast. Flash memory chipmaker Macronix International said last month it will swing into the red this year after a profit projected previously, citing a weaker-than-expected recovery in the industry.
(US$1 = T$34)
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