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TSMC's Chang: IC Market Remains Strong Despite Brief Slowdown

Taipei, July 30, 2010 (CENS)--Taiwan Semiconductor Manufacturing Co. (TSMC) Chairman and Chief Executive Morris Chang yesterday said global semiconductor market will remain strong as a whole into the second half of this year despite a brief slowdown.

Chang made the statement at TSMC's institutional investor conference held to announce its second quarter results.

Chang stressed even though market boom will slow down, the low-gear advance will last only briefly and could not be the sign of downturn beginning. He conceded that the lines of customers waiting for his company's foundry capacities have shortened, compared with three months ago. Some institutional investors interpreted the statement as customers feeling relieved in light of easing capacity shortage at TSMC.

nVidia's recent cut on its revenue goal for the third quarter triggered worries among institutional investors that TSMC, which is the prime supplier of 300-mm wafer foundry capacity to nVidia, would see its sales hit by nVidia's weaker sales. TSMC executives also confessed that the company's shipments of wafers for carrying PC chips will slightly dip in the third quarter from the second quarter. But they stressed the foundry supplier's capacities remain tight this quarter.

Strong market is reflected by the company's record-high net earnings of NT$40.28 billion (US$1.2 billion at US$1:NT$32), or NT$1.55 per share, for the second quarter. Also, the company's consolidated revenue for the second quarter surged 13.9% sequentially, to NT$104.9 billion (US$3.2 billion), higher than NT$102 billion (US$3.1 billion) projected by the company. Gross margin for the second quarter was 49.5%, reaching high end of the 48-50% range set by the company.

At the conference, Chang also hiked, for the first time, growth forecast of silicon foundry market to an annual pace of 40% from 36% this year, in line with his consistent view that the silicon foundry sector performs better than the semiconductor industry as a whole.

Chang emphasized that demands for high-end foundry processes remain tight as inventory backlogs at design houses and integrated device manufacturers (IDMs) are now lower than the levels they usually keep during average seasons. He forecast low inventory levels would last until the end of this year.

TSMC projected its consolidated revenue for the third quarter at NT$109-111 billion (US$3.40-3.46 billion), another new high in the company's history. Also, the company forecast its gross margin for the quarter to post somewhere between 48% and 50%.

(by Ken Liu)
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