TSMC Reports Strong March Revenues

Silicon foundry giant Taiwan Semiconductor Manufacturing Co. (TSMC) has announced consolidated net revenue of NT$49.9 billion (US$1.6 billion) for March, surging 6.7% from a month earlier and 13.2% year on year, which are slightly better than expectations.

The March result helped swell the company's revenue for the first quarter of 2014 to NT$148.2 billion (US$4.94 billion), increasing 0.8% from the fourth quarter of 2013 and 11.7% year on year. The quarterly result exceeded the improved goal of NT$147 billion (US$4.9 billion) and mitigated originally planned quarter-on-quarter decrease of 5-7% moderately.

Its Q1 gross margin came to 47%, better than originally planned 44.5-46.6% and rising 2.5% from the fourth quarter of last year. Net operating income ratio grew to 35% from originally planned 32-34%. Earnings per share is estimated at over NT$1.71.

Industry executives ascribe the company's strong first-quarter result mostly to swarming orders for 28nm process foundry service from heavyweight mobile-chip vendors including Qualcomm Inc., Broadcom Corp., and MediaTek Inc. TSMC spokesperson, Lora Ho, attributes the strong result to vigorous restocking by customers in addition to brisk orders for 28nm process foundry service.

TSMC Chairman Morris Chang says that the company will still profit from strong global demand for mobile devices this and next year, with revenue for this year projected to grow double-digit, estimating each smartphone to contribute around US$8 to the company's revenue.

Industry executives estimate sales of 28nm process, 20nm process, and application-specialty process services to help boost the company's Q2 revenue 15-20% from the first quarter, to a fresh high of NT$170-178 billion (US$5.68-5.93 billion).

People familiar with the company's manufacturing plan point out that TSMC is briskly ramping up 20nm process capacity with the aim of ending the fourth quarter of this year with 20% of production for 20nm process.

Macquarie Securities forecasts TSMC's revenue for this year to rise an annual 21% based on strong market cycle, the company's sustainable competitiveness in 28nm process production, and increased production on 20nm process. The securities company has set its target price for TSMC stock to NT$145 (US$4.8) per share, up from NT$120 (US$4) on Apr. 11. (KL)

TSMC's Consolidated Revenue For Feb.-Mar.

(Unit: NT$ million)

Period	March 2014	February 2014	M-o-M Increase (Decrease) %	March 2013	Y-o-Y Increase (Decrease) %	January to March 2014	January to March 2013	Y-o-Y Increase (Decrease) %
Net Revenue	49,956	46,829	6.7	44,134	13.2	148,215	132,755	11.7

Source: TSMC