Chipmaker TSMC sees drop in quarterly profits

The contract manufacturer of chips for AMD, Qualcomm and others said it saw a 64 percent drop in income last quarter, blaming the global economic recession
Written by Colin Barker, Contributor

Major contract chipmaker Taiwan Semiconductor Manufacturing Co has announced that its fourth-quarter income dropped 64 percent year-on-year, blaming a worldwide recession and a sharp drop in demand.

The Taiwanese manufacturer makes semiconductors for AMD, Qualcomm and Texas Instruments, including some of the most advanced 45nm-process technology. It said in a statement on Thursday that net income for the quarter was NT$12.45bn (£270m), compared with NT$34.48bn for the same quarter in 2007. Total profit for the quarter was NT$64.56bn.

"Triggered by a deepening economic recession worldwide and customers' inventory adjustment, the fourth quarter saw a sharp decline in the demand for semiconductors across all applications", TSMC said.

According to TSMC, 65nm technology accounted for 27 percent of total wafer sales in the fourth quarter, up from 25 in the third. Revenue from the older 90nm technology declined from 26 to 21 percent. Revenue from more advanced technologies (0.13 micron and below) accounted for 65 percent of total wafer sales, TSMC said, which was slightly below the 66 percent in the third quarter.

Compared with the third quarter, TSMC's fourth-quarter results showed a decrease of 59.3 percent in net income.

The semiconductor maker did not give any hope of a better situation ahead. "The global economic recession continues to worsen. Fourth-quarter end-market sell-through was much below the already conservative expectations, and consumer demand remains very weak", Lora Ho, chief financial officer at TSMC, said in the statement.

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