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To: BWAC who wrote (167679)	10/30/2001 1:10:58 PM
From: D.J.Smyth	Respond to of 176387

TSMC sees chip conditions improving next year By Alexandra Harney in Taipei Published: October 26 2001 16:23 \| Last Updated: October 26 2001 20:42 Taiwan Semiconductor Manufacturing Company, the world's leading maker of memory chips on contract, on Friday continued to confound pessimistic expectations for global technology demand when it forecast an improvement in market conditions next year. "There is no reason to think that the first quarter next year will be worse than the fourth quarter this year," said Morris Chang, chairman. TSMC expects 15 per cent growth in sales in the fourth quarter compared to the third and a doubling of profits on the operating and net levels. Earlier this week, in a rare vote of confidence for Taiwan's weakening industrial base, Mr Chang confirmed plans to invest nearly US$20bn in six new state-of-the-art plants. Third-quarter performance, however, suggested TSMC had been hit hard by the retrenchment in technology purchases since September 11's terrorist attacks. Net profits fell 94 per cent to T$1.24bn ($36m), on sales down 43 per cent to T$26.94bn. Operating profits were down 90 per cent at T$1.94bn, in line with earlier forecasts. TSMC is one of the few companies in the semiconductor industry that have remained profitable despite the worst slump in history. Last month, it revised down its full-year forecast but still expects net profits of T$11bn. The World Semiconductor Trade Statistics organisation said this week that all of the growth in global chip revenues next year would come from Asia, excluding Japan. It expects 2.6 per cent growth in revenues to US$142.38bn, after a 32.1 per cent decline this year. Analysts said that TSMC, which only produces if a customer asks it to, was better positioned to survive the downturn because it had built a strong client base, particularly in the wireless sector. "After September 11, the company did see a slowdown," said Andrew Lu, head of semiconductor research at Salomon Smith Barney. "All of its customers were cautious. But moving into October, the customers are coming back." news.ft.com