TSMC's Q3 profits sink 35 percent on weak demand

Economics conditions have reduced demand for TSMC's chips

Taiwan Semiconductor Manufacturing Co. (TSMC) said Thursday net profits in the third quarter dropped 35.2 percent year-over-year, as demand for the company's chips fell because of economic conditions. The company however expects a turnaround next year, when it starts delivering high-performance, 28-nanometer chips for tablets and smartphones.

TSMC, the world's largest contract chip manufacturer, includes mobile chip vendors Nvidia, Qualcomm and Texas Instruments among its customers. Customers have been "de-stocking" their inventories because of uncertainties about the market, TSMC CEO Morris Chang said.

"Obviously, the weakening outlook of the world economy has impacted the demand for semiconductors," he said during a conference call. The company is now forecasting global semiconductor growth to be 1 percent this year, which is lower than the 5 percent the company forecasted earlier in the year, Chang added.

TSMC's net profits for the third quarter were NT$30.3 billion (US$1.0 billion), down from the NT$46.9 billion in the same period a year ago. Net sales reached NT$106.4 billion in the quarter, a 5.1 percent dip from the NT$112.2 billion in the third quarter of 2010.

The company's third quarter sales in its consumer and computer segments also dropped 18 percent and 16 percent respectively compared to the second quarter.

Chang expects the reduction of inventory by its customers to continue until the end of the year. The company's growth will pick up next year, as it plans to produce in volume chips using its 28-nanometer manufacturing process, he said. The technology allows TSMC to build chips for companies like Nvidia and Qualcomm that will deliver higher performance for devices like tablets and smartphones.

"We expect 28 nanometer to be a large source of growth next year," Chang said. While TSMC expects the semiconductor industry to grow by 3 to 5 percent in 2012, its own growth will be several points higher because of its 28-nanometer manufacturing technology, he added.

"I think perhaps after all this de-stocking we may just blink and suddenly find a surge that's amazingly strong," Chang said.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags business issuesfinancial resultsTaiwan Semiconductor Manufacturing Co.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michael Kan

IDG News Service
Show Comments

Father’s Day Gift Guide

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?