TAIPEI-- Taiwan Semiconductor Manufacturing Co. on Thursday
projected lower revenue for the current quarter, citing escalating
competition, tapering smartphone demand from emerging markets and a
strengthening Taiwan dollar.
For the second quarter ending June 30, the iPhone chip maker
expects revenue of between 204 billion New Taiwan dollars (US$6.52
billion) and NT$207 billion. That would be down 6.7% to 8.0% from
the previous quarter, but 11% to 13% higher than a year ago.
Sales at TSMC are seen as a barometer of global technology
demand since the company is the world's largest maker of non-memory
microprocessors based on others' designs.
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. Weakness in the euro and
emerging-market currencies is also hurting smartphone demand in
some parts of the world.
Adding to TSMC's woes, Qualcomm Inc., one of its major
customers, lost a massive contract to supply its new Snapdragon 810
processors to Samsung Electronics Co. Rising supply of cheaper
Chinese-made chips is also putting pressure on incumbent
players.
TSMC co-Chief Executive Mark Liu said revenue generated from
contract chip manufacturers world-wide is likely to grow around 10%
this year, down from the company's prior estimate of 12% growth.
The Taiwanese chip maker maintained that its own revenue growth
would still be "several percentage points' above the industry
average.
"Some mobile customers cut back their delivery schedule because
demand didn't come as they had anticipated," Mr. Liu told an
investor conference in Taipei.
"But we think [these customers'] inventory adjustment will be
complete by the end of the second quarter. The end market of
smartphones will still have healthy growth this year," he
added.
TSMC's lower outlook came after the company reported its
second-most profitable quarter. Net profit in the first quarter
jumped 65% to NT$78.99 billion, while revenue rose 50% to NT$222.03
billion, meeting the company's target.
Last year, TSMC broke Samsung'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.
However, TSMC year, as it expects to lose some orders to
Samsung, which is months ahead in migrating to the next-generation
14-nanometer chip process technology and putting TSMC's contract
with Apple at risk.
TSMC Chief Financial Officer Lora Ho said the company is
reducing capital spending for this year by US$1 billion to a range
of US$10.5 billion to US$11 billion. She said it was because the
chip maker is speeding up its conversion of equipment to more
advanced process technology, resulting in less investment on new
machines.
Write to Aries Poon at aries.poon@wsj.com
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