TSMC cuts 2018 sales target; Q4 revenue growth forecast at 10%

Taipei, Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, said Thursday it has trimmed its sales growth forecast to 6.5 percent for 2018, with market analysts attributing the cut to weakening demand for mining devices used for cryptocurrency transactions.

At an investor conference, TSMC said its sales for 2018 are expected to grow about 6.5 percent year-on-year in U.S. dollar terms, a downgrade from an earlier forecast of a 7-9 percent increase.

“The semiconductor industry, including TSMC, had appeared too upbeat about demand for cryptocurrency-related mining devices,” Mega International Investment Services Corp. analyst Alex Huang said. “It turns out that the firm has to lower its sales guidance now due to the fast changing market conditions.”

Huang said the revised 2018 sales growth target by TSMC came at the upper end of the market’s estimate.

TSMC’s investor conference was watched closely by investors who were waiting for the company’s third quarter results and sales forecast for the fourth quarter and 2018 as a whole.

In the third quarter, the chipmaker posted NT$89.07 billion (US$2.88 billion) in net profit, up 23.2 percent from the previous quarter but down 0.9 percent from a year earlier, with earnings per share at NT$3.44.

Third quarter earnings were in line with market expectations.

Lora Ho (???), senior vice president and chief financial officer of TSMC, said the company’s sales for the fourth quarter are expected to range between US$9.35 billion and US$9.45 billion, up about 10 percent from the third quarter.

Ho said the fourth quarter is expected to see falling demand for mining devices used for cryptocurrency transactions, but solid demand for high-end smartphones, graphics processors and artificial intelligence applications are expected to offset the impact.

She said demand for chips made by TSMC’s 7 nanometer process, the latest technology which started commercial production in the first half of this year, is expected to continue to drive the company’s sales growth in the fourth quarter.

According to Ho, the 7nm technology is expected to account for more than 20 percent of TSMC’s total sales in the fourth quarter, up from 11 percent in the third quarter.

For the whole of 2018, the 7nm process is expected to make up about 10 percent of TSMC’s total sales, Ho said.

Also at the investor conference, TSMC Chief Executive Officer and Vice Chairman C.C. Wei (???) said excluding memory chips, the global semiconductor industry is expected to post a 5-7 percent year-on-year increase in sales for 2018 with revenue growth for the pure foundry business expected to be 6-7 percent.

Wei said he is upbeat about the business outlook for 2019, when demand for smartphones, high performance computing devices, graphics processors and AI applications is forecast to remain strong.

He said 7nm technology will account for more than 20 percent of the company’s total revenue in 2019, up from 10 percent this year.

Trial production of the more advanced 5nm process is likely to start in the first half of 2019, with commercial production set to launch in the first half of 2020, Wei said.

Source: Focus Taiwan News Channel