By Aries Poon
TAIPEI-- Taiwan Semiconductor Manufacturing Co., the maker of
iPhone chips, reported Thursday a 65% jump in its first-quarter net
profit, propelled by strong demand for Apple Inc. devices.
TSMC said its net profit for the three months ended March 31 was
78.99 billion New Taiwan dollars (US$2.53 billion), compared with
NT$47.87 billion a year earlier, and was largely in line with
analysts' expectations. Its revenue in the quarter reached
NT$222.03 billion, the company said last week, up 50% from a year
ago and matching the management's target.
Last year, TSMC broke Samsung Electronics Co.'s monopoly and
became the primary supplier of chips for iPhones. Apple's massive
orders pushed TSMC's revenue and earnings to record-highs in
2014.
But TSMC in January warned of a slower year ahead, as it expects
to lose some orders to Samsung, which is months ahead in migrating
to the next-generation chip process technology. The South Korean
chipmaker's finer 14-nanometer technology will pack more
capabilities on a chip and lower production costs, putting TSMC's
contract with Apple at risk. Analysts say the rising supply of
cheaper Chinese-made chips is also putting pressure on incumbent
players including TSMC.
As the world's largest maker of non-memory microprocessors based
on others' designs, sales at TSMC are seen as a barometer of global
technology demand. Market research firm IDC says global smartphone
shipment growth is set to slow to 12% this year, from 26% growth in
2014, as the market matures and becomes more crowded. A weaker euro
and emerging-market currencies are also hurting smartphone demand
in Europe and Latin America, analysts say. Adding to TSMC's woes,
Qualcomm Inc., one of its major customers, l ost a massive contract
to supply its new Snapdragon 810 processors to Samsung's latest
flagship Galaxy S smartphones.
Analysts expect TSMC to trim its revenue guidance for this year.
TSMC had projected its 2015 revenue to grow by "several percentage
points" above the industry average of 12%. Ahead of the earnings
release, a Thomson Reuters survey showed that analysts expect
TSMC's revenue to rise 19% this year to NT$904.74 billion. Its
revenue rose 28% last year.
Write to Aries Poon at aries.poon@wsj.com
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