TSMC Expects 22% First Quarter Revenue Drop After Bumper 2018

ZHANG YUSHUO

(Yicai Global) Jan. 18 — Taiwan Semiconductor Manufacturing, which makes chips for the likes of Apple, Qualcomm and Huawei, expects its first quarter revenue to fall between 21.3 and 22.3 percent this year as slowing economic growth pulls the plug on its record high profit last year.

The Hsinchu-based firm, also known as TSMC, expects to bring in around USD7.35 billion in income this quarter at an operating profit margin of about 32 percent, it said online yesterday after releasing its earnings report for the fourth quarter of last year.

The company brought in revenue of USD9.4 billion in the fourth quarter, up 10.7 percent from the third and 2 percent from a year earlier at an operating profit margin of 37 percent. It earned a net income of TWD100 billion (USD3.2 billion), taking full-year earnings to a new high of TWD351 billion.

“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,” said Lora Ho, chief financial officer.

Shareholders appeared unfazed, with TSMC’s stock price [NYSE:TSM] gaining 1.8 percent to USD36.3. But industry insiders have expressed concerns about capital expenditure, ultraviolet technologies in seven nanometer wafers, business orders outside the smartphone sector and chips for 5G mobile networks.

Chairman Wei Zhejia still expects revenue to grow this year, but not at the 5 percent to 10 percent rate previously forecast, he said. The semiconductor industry will only grow about 1 percent this year as economic expansion slows, much less than last year’s 8 percent, he added, saying the foundry industry will remain steady, expanding at a similar pace to the 6 percent in 2018.

Editor: James Boynton