UPDATE - TSMC Q4 net falls, recovery seen in Q2 2003
Tuesday January 28, 5:25 am ET
By Michael Kramer
(Adds details)
TAIPEI, Jan 28 (Reuters) - TSMC (Taiwan:2330.TW - News; NYSE:TSM - News), the world's largest contract microchip maker, on Tuesday posted a sharp fall in fourth-quarter net profit but forecast imminent recovery from the weak trading conditions of late 2002.
Revenue would begin to grow from quarter to quarter as soon as the April-June period of this year, Taiwan Semiconductor Manufacturing Co (TSMC) said, standing by an outlook that it issued in October 2002.
The company -- which makes chips on behalf of customers such as Nvidia Corp (NasdaqNM:NVDA - News), Motorola Inc (NYSE:MOT - News) and Texas Instruments Inc (NYSE:TXN - News) -- posted a T$2.55 billion (US$73.7 million) net profit, or T$0.13 per share, for the October-December quarter.
The result was worse than the T$4.514 billion net profit of a year earlier and the T$3.63 billion profit that analysts had expected.
Chairman Morris Chang said he was maintaining his forecast that sales would bottom out in the January-March period and resume quarter-on-quarter growth in the second quarter.
"The flowers wilt, the flowers bloom. Now it seems like things are getting better," Chang told a briefing of institutional investors.
TSMC set its 2003 capital expenditure budget at between US$1.0 billion and US$1.5 billion, against the US$1.65 billion of 2002. That offered no good news for makers of semiconductor manufacturing equipment, such as Applied Materials Inc (NasdaqNM:AMAT - News) and ASML Holding NV (Amsterdam:ASML.AS - News).
Chang said the company expected first-quarter wafer shipments to fall by a "single digit" percentage from the previous quarter. The company would use 60 percent of its production capacity, down slightly from 61 percent.
Average selling prices in the current quarter would drop seven percent from the previous three months, he said.
That forecast surprised analysts, who had expected to hear of a poor result for the fourth quarter but not such a big fall in first-quarter prices.
Even the result missed market expectations of a T$3.63 billion profit, according to consensus forecasts compiled by Multex Global Estimates. It was also lower than the previous quarter's T$3.16 billion, despite unexpected rush orders to meet pre-Christmas demand for electronics.
The full year saw TSMC's profits rise 49 percent to T$21.61 billion, or T$1.14 per share, but most of the profits came in the first half, when consumer demand for gadgets such as DVD players and digital cameras lifted the semiconductor industry out of its 2001 downturn, its worst ever.
TSMC's Chang warned in July that recovery had hit a "pause" that would last about six to nine months, as factors such as corporate scandals in the United States hit consumer confidence.
TSMC shares have fallen about 16 percent since Chang's warning, while the benchmark TAIEX (Taiwan:^TWII - News) share index has lost less than two percent.
The company announced its results after the close of share trading. The shares lost T$1.20, or 2.5 percent, to close at T$47.70, while the TAIEX rose 0.9 percent.
TSMC has said that chips used for high-speed wireless Internet connections and mobile phones had been among the market's few bright spots, while demand for personal computer chips had been stagnant as penny-pinching corporations found little reason for upgrading computers bought around 2000.
The Netherlands' Philips Electronics NV (Amsterdam:PHG.AS - News) is one of TSMC's largest shareholders. (US$1 = T$34.6) |
