TSMC Q2 profit growth slows on weaker sales

July 16, 2015
TSMC, the world's biggest contract microchip maker by revenue had posted 65 percent year-on-year growth in the first quarter
TSMC, the world's biggest contract microchip maker by revenue had posted 65 percent year-on-year growth in the first quarter

Taiwan Semiconductor Manufacturing Co. said Thursday its second quarter profit growth slowed to 33 percent year-on-year as sales fell for the second consecutive period on weaker smartphone demand in China and other emerging markets.

The world's biggest contract microchip maker by revenue had posted 65 percent year-on-year growth in the first quarter.

TSMC's slowdown comes as the company faces increased competition from regional rivals such as South Korea's Samsung, and as China's tech industry pushes for the development of domestic smartphone brands and homegrown hardware, including chips.

Chips for communication including smartphones accounted for 62 percent of TSMC's revenue in the second quarter.

"During the second quarter we saw demand for smartphones become weaker than we expected due to slower demand in and in China for mid to low-end smartphones," said Mark Liu, co-chief executive officer of TSMC.

"This weaker demand is probably due to a strong US dollar to emerging market currencies and... regional economic conditions," he added.

Although TSMC forecast an uptick for the third quarter, growth would remain "modest".

"Slower demand in emerging markets and China, macroeconomic uncertainties, and cautious inventory management (are) behind our modest growth outlook in the third quarter," he said.

Sales for the three months until June 30 rose 12.2 percent year-on-year to Tw$205.44 billion ($6.6 billion) but slid 7.5 percent when compared with the first quarter.

TSMC expects a slight improvement in the third quarter, forecasting revenue to come in between Tw$207 billion and Tw$210 billion.

"We expect customer and market demand will improve in the second half," said Liu.

"Growth is expected to come from industrial and automotive (segments), and new iPhone launches and new Android high-end phones."

Taiwan's exports contracted 7.1 percent in the first half of 2015 due to weak overseas demand for electronic products and falling oil and steel prices. Emergence of Chinese electronics supply chains is also eating into orders from mainland China, according to the government.

TSMC remains tight-lipped about its clients, refusing to officially confirm that it is an Apple chip supplier.

Explore further: Taiwan Semiconductor lifts Q1 guidance on upbeat outlook

Related Stories

Taiwan Semiconductor lifts Q1 guidance on upbeat outlook

March 12, 2014

Taiwan Semiconductor Manufacturing Co, the world's leading contract microchip maker, on Wednesday raised its first-quarter guidance buoyed by robust demand for sophisticated chips used in smartphones and tablets.

Chipmaker TSMC posts 24 percent rise in 2Q profit

July 18, 2013

(AP)—Taiwan Semiconductor Manufacturing Co., the world's largest contract chip manufacturer, reported a 24 percent jump in second quarter profit Thursday, driven by sales growth in smartphones and tablet computers that ...

TSMC reports 16 percent rise in 2Q profit

July 19, 2012

(AP) — Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, says its second quarter profit rose 16 percent year-on-year and predicted continuing strong growth in the third quarter.

Chipmaker TSMC gets tablet, smartphone boost in 1Q

April 18, 2013

Taiwan Semiconductor Manufacturing Co., the world's largest contract chip manufacturer, reported an 18 percent jump in first quarter profit as increased global sales of smartphones and tablet computers boosted demand for ...

TSMC reports shrinking profit, revenue in 3Q

October 27, 2011

(AP) -- Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, said Thursday its earnings dropped by more than a third in the latest quarter amid uncertainties about the global economy.

Recommended for you

Pushing lithium ion batteries to the next performance level

December 13, 2018

Conventional lithium ion batteries, such as those widely used in smartphones and notebooks, have reached performance limits. Materials chemist Freddy Kleitz from the Faculty of Chemistry of the University of Vienna and international ...

Uber filed paperwork for IPO: report

December 8, 2018

Ride-share company Uber quietly filed paperwork this week for its initial public offering, the Wall Street Journal reported late Friday.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.