TSMC Predicts Slump, Stakes 2013 Rebound Hopes on 28 nm Mobile Chips
October 25, 2012 1:33 PM
comment(s) - last by
TSMC posts record profit, but warns of slowing orders from chip designers like NVIDIA and Qualcomm
for Taiwan Semiconductor Manufacturing Comp., Ltd. (
) one of the world's largest third-party chip fabricators were impressive for the third calendar quarter of 2012. The Taiwanese chipmaker raked in T$49.3 ($1.69B USD) in profits -- a record and substantially better than the T$45.3 ($1.55B USD)
by 22 analysts in a Thomson Reuters I/B/E/S poll. Gross margin a measure of return on sales was 48.8 percent (higher is better) and net revenue was T$141.4 ($4.84B USD).
I. From Fast-Lane Straight to Slowdown
But like other large chipmakers --
) -- TSMC is offering up a pessimistic outlook for the rest of the year, warning of slowing sales. TSMC warns that end users -- like automakers and computermakers -- are reducing purchase orders to its clients -- which
, Inc. (
), Texas Instruments, Inc. (
), and NVIDIA Corp. (
). Those chip designers are responding by cutting production with third-party fabs like TSMC.
The net result is a slowdown in the entire food chain. The last year has been very
kind to TSMC's clients
, but the next half-year is unlikely to be.
The apparent driver of the bearish chip turn is a slow global economy, which in turn has dented expectations for consumer demand for Q4 2012 and Q1 2013. Broadcom Corp. (
) and LSI Corp. (
) two of TSMC's fab peers, joined it in offering up pessimistic outlooks.
A slowing global economy has TSMC warning of weak results in Q4 2012
and Q1 2013. [Image Source: Philadelphia News]
II. Weathering the Storm
While the slowdown is bad news for everyone, TSMC is confident it can weather the storm a bit better than most. It's already starting see payoff in
its 28 nm
logic chip lines. As TSMC was the first major chipmaker outside of Intel to hit this small a node on the
logic chip production
side, its stock is being hotly sought after by Advanced Micro Devices, Inc. (
), NVIDIA, and others, both in the mobile
and the traditional PC markets
In the last quarter 28 nm logic chip sales accounted for 13 percent of TSMC's total revenue, twice the sales of the previous quarter.
TSMC also believes that its strong ties to the mobile industry will cause it to take less of a hit, as customers tend to turn to cheaper mobile devices, rather than traditional PCs in a struggling economy.
Between those two mitigating factors TSMC predicts that while revenue will drop on a year-to-year basis for Q4 and have another "modest dip" in Q1 2013, that it will rebound by Q2 2013.
TSMC says its 28 nm production will help mitigate the effects of the slowing economy.
[Image Source: Reuters]
Chairman Morris Chang told investors and reporters, "We think the reason (for rebound in Q2) is the strength of mobile demand. We expect mobile products to be strong for a number of years."
TSMC continues to try aggressively to stay ahead of other third-party fabs and keep pace with Intel via an aggressive capital commitment to die shrinks. It plans to spend $8.3B USD in total this year, with spending next year "in the same ballpark".
This article is over a month old, voting and posting comments is disabled
Saturated for sure
10/25/2012 7:53:40 PM
Their revenue will and must be slowing down as more people realize that newest silicons doesn't really improve live. I believe in intelligent software, not in more of utility apps and gigahertz race
RE: Saturated for sure
10/25/2012 9:52:57 PM
Your opinion is unsupported by the evidence. The Ghz race ended years ago. Note the transition from desktop machines to laptops, smartphones and pads. The new silicon allows form factor reduction, portability, battery life, improved screens, new wireless technologies, and cost reductions.
Much more likely is the effect of the global economic slow down. It's not just chip makers who are seeing revenue reductions, it's everybody.
RE: Saturated for sure
10/27/2012 1:34:36 AM
He also forgot to consider that as SoC's become even more integrated, transistor count will increase, which means chip size/complexity increases.
Basically what used to take 2, 3 or 4 chips will now be done by one big chip. TSMC just needs to make sure they make the same profit making that one big chip as they did making the collection of smaller ones.
"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins
Intel's Cuts Median Q3 Earnings Outlook by $1.1B USD
September 7, 2012, 12:53 PM
TSMC Doesn't Want Apple, Qualcomm's Money for VIP Chip Access
August 29, 2012, 1:30 PM
Samsung to Crown Texas Fab With $4B USD Revamped SoC Line
August 21, 2012, 4:16 PM
Intel, Qualcomm, ON Semi. Nichia are Biggest Chipmaking Winners of 2011
March 27, 2012, 5:49 PM
Worth the Wait: NVIDIA's Kepler GTX Geforce 680 is New Graphics Market King
March 23, 2012, 12:00 AM
Retiree Sues Apple For $7,500 for Wiping Honeymoon Photos From His iPhone
November 30, 2015, 10:23 AM
iPhone 7 May Pack 3-4 GB Memory, More Storage; 4-Inch Comeback is Rumored
November 20, 2015, 10:12 PM
OnePlus One, OnePlus 2 Will Receive Android Marshmallow in Q1 2016
November 16, 2015, 9:58 AM
Lenovo Whoa: Motorola Droid MAXX 2 and Turbo 2 Break Cover in Leaks
October 26, 2015, 3:12 PM
Leak: Apple Preps for First Real Android App Foray With New Apple Music App
October 24, 2015, 1:59 PM
Pepsi Smartphone? Empty Calories Coming Soon to the Midrange
October 12, 2015, 11:41 PM
Latest Blog Posts
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
More Blog Posts
Copyright 2016 DailyTech LLC. -
Terms, Conditions & Privacy Information