TSMC Q4 results lead foundry pack

While the world's leading semiconductor manufacturing foundry financial results bested its competition, like them, it also expects the impacts of seasonality to impact Q1 revenues.

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 1/31/2008

Hsin-Chu, Taiwan-based semiconductor foundry leader Taiwan Semiconductor Manufacturing Co (TSMC) increased its foundry market lead with Q4 2007 results that outperformed its competition.

TSMC today announced consolidated revenue of $2.9 billion (93.9 billion new Taiwanese dollars) for its Q4 ended December 31, 2007, reflecting year-over-year growth of 25.2% and sequential growth of 5.5%, while results from foundry challengers UMC and SMIC earlier this week were less impressive.

TSMC’s Q4 net income of $1.1 billion (34.5 billion NT) and diluted EPS of $0.20 per ADS unit (1.31 NT) increased year-over-year by 23.5% and 24.3%, respectively. On a sequential basis, Q4 net income rose 13.5%, while diluted EPS rose 14.3%.

TSMC said it attributed its results to stronger than expected demand for its wafers across all major product segments -- communication, computer, and consumer – which led to its Q4 results approaching or exceeding the high end of guidance.

Advanced process technologies of 0.13-micron and below accounted for 59% of wafer revenues with 90 nm process technology accounting for 29% and 65 nm reaching 10% of total wafer sales.

TSMC’s Q4 gross margin was 47.8%, operating margin was 39.2%, and net margin was 36.7%.

Lora Ho, VP and CFO of TSMC commented on the results in a statement, “Fourth quarter set another record for our business in terms of revenues and wafer shipment, while our margins improved sequentially. Although the global economy is facing a large degree of uncertainty, we expect our first quarter to follow a normal seasonal pattern and our results will track with normal seasonality.”

Based on its current business outlook, and the implementation of a new ROC accounting rule which requires the expensing of employee profit sharing, TSMC’s expectations for Q1 are for revenue to be between $2.7 to $2.8 billion (87 and 89 billion NT); gross profit margin expected to be between 42 and 44%; operating profit margin to be between 32 and 34% with 2008 capital expenditure to be approximately $1.8 billion.