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TSMC registers 10.9% revenue growth in Q4

Posted: 20 Jan 2014 ?? ?Print Version ?Bookmark and Share

Keywords:TSMC? Intel? Samsung? foundry? mobile device?

Taiwan Semiconductor Manufacturing Co. (TSMC) has logged a 10.9 percent growth in revenue in Q4, which ended December 2013, compared to the same quarter a year ago. According to the company, its Q4 net income and diluted earnings per share both increased by 7.7 percent.

The foundry firm attributed its Q4 growth to the accelerated demand for mobile devices late in the year and the company's improved margins. TSMC said that gross margin for the quarter was 44.5 percent, operating margin was 32.8 percent and net profit margin was 30.7 percent. TSMC, however, isn't optimistic about the coming quarter.

Lora Ho, SVP and CFO of TSMC, stated that the company expects its Q1 revenue to drop sequentially by about six percent. It's due to "IC companies' weak seasonal demand and the continuing inventory reductions by the fabless companies," she added.

The continued demand for mobile computing devices in Q4, however, appears to have masked what was going on in the rest of the application segments.

During the earnings call, Ho said, "Our demand for computer, consumer and industrial-related products all declined by double digits." She added "inventory correction in the IT supply chain affected overall demand for TSMC's wafer." As a result, communication became the sole growth segment for TSMC, with its revenue contribution increasing from 49 percent in Q3 to 54 percent in Q4.

Undoubtedly sluggish personal computer sales are affecting many vendors in the semiconductor industry including Intel Corp. Earlier this week, Intel said it has delayed opening a factory in Chandler, Ariz., that was originally planned to start producing chips made from the most advanced 14nm process.

Looking at TSMC's revenue by technology, Ho stressed the company's customers' strong demand for 28nm technology. The revenue contribution from 28nm node "jumped from 13 percent in the prior quarter to 22 percent in Q4," she said.

During the call, TSMC's chair and CEO Morris Chang added that the company's production of 28nm wafers in 2013 will "triple that of 2012."

As for high-k, Chang explained that the company has four different types: three are high-k metal gate, and the earliest type the company introduced was the oxynitride. He acknowledged that the majority of the high-k production last year was the oxynitride. However, he said that the more advanced version high-k metal gate will surpass oxynitride in Q3 this year.

TSMC expects the capital expenditures for 2014 to be between $9.5 billion and $10 billion.

During the earnings call, Chang said that 88 percent of capital spending will be "for 28nm, 20nm, 16nm and building facility equipment."

As for facilities and equipment, Chang said that five percent will be spent for R&D equipment, which will be needed to develop advanced technology 10nm and beyond.

Two percent of the company's capital spending is for specialty technology equipment, necessary for power, embedded flash, MCU, imaging and others. Chang added that TSMC bought last year "a piece of land in Zhunan," which he described as 15 or 20 minutes of driving away from TSMC's headquarters.

According to a Reuters' report, TSMC had "the third-largest capital spending in the chip industry last year, trailing Samsung Electronics, which spent around $22 billion, and Intel which spent around $11 billion."

- Junko Yoshida
??EE Times

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