Taiwan Semiconductor Manufacturing Co. (TSMC) reported third-quarter net profit was up by 62 percent year-over-year, with the company's revenue beating its original estimate as a result of strong demand for mobile chips.
TSMC's net profit for the quarter ending Sept. 30 was NT$49 billion (US$1.68 billion), up from NT$30 billion in the same period a year ago.
Revenue was NT$141 billion, an increase of 32.8 percent year-over-year from NT$106 billion. TSMC had originally projected revenue for this year's third quarter would range between NT$136 billion to NT$138 billion.
TSMC said part of the reason for the higher shipments was high smartphone demand from China, which has become the world's largest smartphone market by shipments, according to research firms.
TSMC, which is the world's largest contract chip manufacturer, has seen its business grow on higher demand for processors for tablets and smartphones. TSMC's clients include mobile chip vendors Nvidia and Qualcomm, and media reports have indicated a possible partnership between the company and Apple to build its newest chips.
"We expect mobile products to fill TSMC's growth for a number of years," said TSMC CEO Morris Chang during a Thursday earnings call.
For the third quarter, shipments of TSMC's new 28-nanometer chips made up 13 percent of the company's revenue, up from 7 percent in the previous quarter. Demand for TSMC's 28-nanometer chips have been high, and the company expects they will eventually make up more than 20 percent of its revenue at the end of this year's fourth quarter.
"And for the whole year of the next, we expect it to be more than 30 percent of our revenue," Chang said.
The company, however, projects a "dip" in its financial performance in the fourth quarter and in next year's first quarter, due to "supply chain inventory adjustment" with its clients, according to Chang. But in next year's second quarter, the growth will rebound, he added.
TSMC expects the company's fourth quarter revenue will range between NT$129 billion and 131 billion.
The company is already accepting test chips from customers for use in the company's upcoming 20-nanometer chip manufacturing process. TSMC has previously said small-scale production of 20-nanometer chips will start in 2013, with full-production taking place in 2014.
Chang also said the company has purchased 14 hectares (34.5 acres) of land to build a new R&D plant in Taiwan that will focus on the development of its 7-nanometer chip manufacturing process.