Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the world's largest contract chip maker, reported a new company high in net profit for the third quarter of this year Thursday, on the back of solid demand for communication, computer and consumer/industrial electronic devices.
In the July-September period, TSMC recorded NT$96.76 billion (US$3.05 billion) in net profit, up 33.4 percent from a quarter earlier and also up 28.4 percent from a year earlier.
Its earnings per share (EPS) for the third quarter stood at NT$3.73, compared with NT$2.80 recorded in the second quarter and NT$2.91 in the same period of last year.
In the third quarter, TSMC's consolidated sales also hit a record high of NT$260.41 billion, which surpassed the company's earlier forecast of between NT$254 billion and NT$257 billion.
Despite the higher net profit for the third quarter, TSMC said, its gross margin fell 0.8 percentage points from the second quarter to 50.7 percent, and its operating margin also dropped to 40.8 percent from the second quarter's 41.2 percent.
In the third quarter, TSMC chips made on the advanced 16 nanometer and 20nm processes accounted for 31 percent of the total sales, while chips made on its 28nm process made up 24 percent of the total revenue, down from 28 percent in the previous quarter.
In the first nine months of this year, TSMC's net profit hit NT$234.05 billion, up 0.1 percent from a year earlier, with EPS of NT$9.03.
In an investor conference, TSMC President and Co-CEO Mark Liu (???) said that his company remains upbeat about its operations in the fourth quarter, although the quarter is traditionally a slow season for the global semiconductor industry.
Liu said that TSMC will ride the wave of solid demand for smartphones in emerging markets, in particular China, as these markets have been gearing up to develop their own 4G networks. Liu added that the booming gaming PC market is expected to give an additional boost to demand for semiconductors.
As a result, Liu said, TSMC is expected to post consolidated sales ranging between NT$255 billion and NT$258 billion for the fourth quarter, down only 0.9 percent-2 percent from the third quarter, compared with an earlier market forecast of a 1 percent-3 percent sequential fall.
TSMC said that its gross margin for the fourth quarter is expected to range between 50.5 percent and 52.5 percent, and that its operating profit could range between 40 percent and 42 percent.
Liu said that global semiconductor sales are expected to grow 1 percent, with revenue in the contract chip manufacturing segment likely to rise 7 percent this year. He added that TSMC is expected to continue to outperform the broader market to post 10 percent sales growth in U.S. dollar terms in 2016.
TSMC said that its capital expenditure for 2016 is expected to reach US$9.5 billion.
Source: Focus Taiwan News Channel