TSMC's Q4 hurt by inventory crush
By Colleen Taylor -- EDN, January 25, 2007
Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has posted slumping Q4 financial results that it chalked up to inventory issues.
The world's top-ranking semiconductor foundry reported consolidated Q4 revenue of $2.28 billion (74.96 billion new Taiwanese dollars), a decrease of 9.1 percent from Q3 and down 5.4 percent year-over year. Q4 net income was $847 million (27.91 billion new Taiwanese dollars), down 14.1 percent from Q3 and down 17.7 percent year-over year. The company's diluted EPS was 16 cents per share, down 14.1 percent from Q3 and down 17.8 percent from Q4 2005.
Gross margin of 46 percent reached the mid point of the company's guidance, while operating margin of 36.6 percent was close to the high end of guidance, TSMC said. Net margin decreased 2.2 percentage points to 37.2 percent from Q3.
Unfortunately for the company, the inventory issues to which TSMC attributed its lackluster results are not expected to clear up right away. "The current inventory correction, which started in the Q3 of last year, is expected to continue through Q1 of 2007, but we expect the overall demand of our business to begin to recover by the end of Q1," Lora Ho, VP and CFO of TSMC, said in a statement.
The company is forecasting Q1 revenue to be between $1.88 billion (62 billion new Taiwanese dollars) and 1.94 billion (64 billion new Taiwanese dollars). TSMC expects gross profit margin to be between 37 percent and 39 percent, and operating profit margin to be between 26 percent and 28 percent.
TSMC's 2007 capital expenditure will be in the range of $2.6 billion to $2.8 billion, equal to what the company laid out to spend in 2006.
