UPDATE - TSMC, UMC post strong revenues on chip revival
Thursday October 9, 5:51 am ET
By Michael Kramer
(adds analyst comment, background)
TAIPEI, Oct 9 (Reuters) - TSMC (Taiwan:2330.TW - News) and UMC (Taiwan:2303.TW - News), the world's two largest contract microchip makers, posted strong revenues on Thursday, a clear sign that consumers are lifting the sector out of a long slump.
Taiwan Semiconductor Manufacturing Co (TSMC) (NYSE:TSM - News) booked September sales of T$18.9 billion ($559 million), surging 48 percent from a year earlier to a record high for a second consecutive month, the company said in a statement.
That took third-quarter revenues to T$54.88 billion, up 27.4 percent from the year-ago period and rising nine percent from the second quarter, according to Reuters calculations.
The company did not explain the September revenue increase, but analysts pinned the gains on increased demand for high-tech consumer electronic devices.
"The momentum is coming from consumers as well as from wireless," said Nomura Securities analyst Rick Hsu, pointing to fast-selling products like DVD players, flat computer screens, digital cameras, mobile phones and wireless Internet devices.
"The fourth quarter will still be strong for TSMC even though it is coming from a higher base," Hsu said, forecasting mid-single digit revenue growth from the July-September quarter.
Taiwan's microchip makers are in the midst of their peak season of the year, as customers such as Motorola Inc (NYSE:MOT - News) stock up on components for a pre-Christmas boom. An improving global economy is also helping sales of consumer products.
TSMC's arch-rival, United Microelectronics Corp (NYSE:UMC - News) also posted strong September sales, rising 25 percent from the year-ago period to T$7.52 billion to hit their highest level since January 2001.
UMC GAINING
UMC's third-quarter revenues were up 11 percent from the same period a year ago, but off 0.7 percent from second quarter.
However, analysts say UMC is beginning to gain momentum after lagging TSMC throughout most of the upturn, as clients gain more confidence in its ability to make cutting-edge chips.
UMC is attracting more orders from mobile phone firms for chips used in new cell phones that can handle photographs and music, said analysts.
TSMC shares have risen 75 percent since the beginning of the year, while UMC rose 49 percent, both outperforming Taiwan's benchmark TAIEX (Taiwan:^TWII - News) share index that grew 32 percent.
On Thursday, TSMC shares gave up 0.72 percent after major shareholder Philips Electronics NV (Amsterdam:PHG.AS - News) said it planned sell some US$1.2 billion in shares of the Taiwan firm to cut debt. UMC shares gave up some 0.66 percent.
TSMC and UMC have been quick to recover from the semiconductor sector downturn that began in 2001 -- the worst year of revenue decline for the industry -- as many other semiconductor firms opted to save money by outsourcing production to contract manufacturers.
However, there were still aspects of the pair's performance that did not match the levels seen in the last boom in 2000.
Although the TSMC said in July it expected more than 90 percent of its production capacity to be used in the third quarter, it regularly reported using more than 100 percent of normal capacity during the last peak in the semiconductor cycle.
UMC said it expected third-quarter capacity utilisation to hover around 80 percent. (US$1 = T$33.8) |
