TSMC forecasts feeble first quarter

January 17, 2019 //By Peter Clarke
TSMC forecasts feeble first quarter
Leading foundry Taiwan Semiconductor Manufacturing Co. Ltd. has predicted first quarter sales revenue that will be down by a fifth sequentially and 9 percent year-on-year as a result of weakness in the economy and a build-up of inventory.

For the 4Q18 TSMC announced consolidated revenue of NT$289.77 billion (about US$9.27 billion at current exchange but reported as US$9.4 billion by TSMC) and net income of NT$99.98 billion (about US$3.2 billion). Year-over-year, fourth quarter revenue increased 4.4 percent while net income increased 0.7 percent.

In US dollars, fourth quarter revenue was reported as $9.40 billion, a 10.7 percent increase from the previous quarter and up 2.0 percent year-over-year.

However, for 1Q18, TSMC is forecasting revenue to be between US$7.3 billion and US$7.4 billion. At the mid-point of the forecast this would be a sequential fall of 21.8 percent. For the first quarter of last year TSMC reported revenue of NT$248.08 billion (about $8.1 billion) and so the revenue forecast sees about a 9 percent decline.

TSMC's problems are thought to stem from weakness in the smartphone market and specifically weak sales of iPhones by leading TSMC customer Apple.

TSMC reported that in the fourth quarter, shipments of 7nm chips accounted for 23 percent of TSMC's total wafer revenue. Advanced technologies, defined as 28nm and more advanced technologies, accounted for 67 percent of total wafer revenue.

"Our fourth quarter business benefited from the strong demand for our 7nm technology covering both mobile and high performance computing applications," said Lora Ho, CFO of TSMC, in a statement. "Moving into first quarter 2019, we anticipate our business will be dampened by the overall weakening of the macroeconomic outlook, mobile product seasonality, and high levels of inventory in the semiconductor supply chain."

The statement said that the 2019 capital expenditure budget is expected to be between US$10 billion and US$11 billion.

Related links and articles:

www.tsmc.com

News articles:

Foundries finish 2018 with modest growth

Apple to lose share in shrinking smartphone market

Report: Order downturn to leave TSMC with spare 7nm capacity


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