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TSMC's 2013 Revenue and Earnings Hit New Highs

2014/01/27 | By Ken Liu

TSMC's 2013 revenue and earnings hit new highs.
TSMC's 2013 revenue and earnings hit new highs.
Last year, Taiwan Semiconductor Manufacturing Co. (TSMC) earned NT$188.1 billion (US$6.2 billion), or NT$7.26 per diluted share in after-tax net income on consolidated revenue of NT$597 billion (US$19.9 billion), with net income rising 13.1% from the previous year to hit a new high along with the total revenue.

In the fourth quarter alone, the company had consolidated revenue of NT$145.81 billion (US$4.8 billion) and net income of NT$44.81 billion (US$1.4 billion), or NT$1.73 per diluted share. On the year-on-year basis, the revenue rose 10.9% while the net income and diluted EPS both gained 7.7%.

In US-dollar term, the fourth quarter revenue decreased 9.3% from the previous quarter but  increased 9.5% quarter on quarter. Gross margin for the quarter was 44.5%, operating margin  32.8%, and net profit margin  30.7%.

Company Chairman Morris Chang ascribed the hefty earnings and revenue growths mostly to increased contracts from smartphone-chip designers, predicting contribution by smartphones to the company's revenue to rise to US$11 per unit this year, on average,with high-end phone even projected to contribute US$13. The contribution was US$8 in 2013 and US$6 in 2012.

Chang predicts the smartphone market to rise quarter by quarter this year, with the high-end market slowing down to around 8% while mid-range market and low-end market soaring 23% and 45%, respectively. He projects the company's revenue from mobile devices to increase around 35% year on year this year.

The company's co-chief executive officer and president, C.C. Wei, says that high-end smartphones have contributed rising revenue to the company for they are migrating to the more complicated 4G technology from 3G technology, driving up the demand for high-end foundry processes such as 28nm.

The world's No.1 tailor-made chip supplier ended the third quarter of 2013 with 51% of production on 28-nanometer and 40-naometer processes combined, with 28nm process alone constituting as much as 34%.

Wei pointed out that the company now has over 60 customers for its 28nm process, with 12 of them migrating to the company's 20nm process service, and that the company will ship sharply more 20nm processed wafers in the third quarter of this year.

The company's chief finance officer (CFO), Loral Ho, says  that the 20nm process will make up 10% of the company's revenue by the of this year.

Mark Liu, the company's other co-CEO and president, says that the company is preparing its 16nm FinFET process for tapeouts, which are the final stage of the design cycle for integrated circuits and printed circuit boards.

TSMC estimates revenue for the first quarter of 2014 to decrease 5-7% from a quarter earlier, in line with market expectations. Gross margin is projected to surge to 46.5%, or stay unchanged, from 44.5% a quarter earlier. Operating income ratio is planned to stay between 32% and 34%, better than market expectations. Behind the projected growth in gross margin is the estimated  increase in the company's capacity utilization.

For this year, the company has planned capital expenditure of US$9.5-10 billion, compared with US$9.7 billion for 2013. (KL)

TSMC's Q4 2013 consolidated results

                                                       (Unit: NT dollar)

Financial Item\Period

Q4 2013 Result (a)*

Q4 2012 Result (b)*

YoY Change (%)

Q3 2013 Result

QoQ Change (%)

Net sales

145,806M

131,445M

10.9

162,577M

10.3

Gross profit

64,862M

62,100M

4.4

78,891M

17.8

Income from operations

47,754M

46,390M

2.9

59,618M

19.9

Income before tax

50,373M

46,284M

8.8

59,349M

15.1

Net income

44,810M

41,603M

7.7

51,952M

13.7

EPS (NT$)

1.73 (c)*

1.61 (d)*

7.7

2.00 (e)*

13.7

Source: TSMC.

*note:

a: Q4 2013 figures have not been approved by Board of Directors

b:Q4 2012 figures were prepared in accordance with TIFRS

c: Based on 25,930 million weighted average outstanding shares

d: Based on 25,928 million weighted average outstanding shares

e: Based on 25,929 million weighted average outstanding shares