Taiwan Semiconductor Manufacturing Co.

UPDATE 2-TSMC April sales up 44 pct y/y, sees better 2006
Wed May 10, 2006 5:03 AM ET

(Recasts with TSMC April sales, more details)

By Kirby Chien and Baker Li

BEIJING/TAIPEI, May 10 (Reuters) - TSMC <2330.TW>, the world's top contract chip maker, on Wednesday posted a 44 percent jump in April sales amid growing demand for new consumer devices that could help boost 2006 revenue up 22 percent from last year.

At a conference in Beijing, TSMC Chairman Morris Chang said his company expected 2006 net profit of US$4 billion on revenue of $10 billion -- both figures slightly below analysts' expectations.

"We should see $10 billion in sales this year," he said.

"For net profit, $4 billion." Chang did not elaborate.

A company spokesman later told Reuters that Chang's comments did not constitute an official forecast, saying the company does not issue annual financial forecasts.

Forecasts from 19 analysts surveyed by Reuters Estimates put TSMC's 2006 net profit at an average T$131.9 billion ($4.2 billion). TSMC earned a net profit of $2.91 billion in 2005.

Analysts expected the company to garner revenue of T$327.3 billion ($10.42 billion) this year, compared with last year's $8.23 billion.

"TSMC definitely can reach the target," said KGI Securities analyst Tiffany Chen. TSMC's 2006 sales and earnings forecasts were 2.5 percent and 5 percent lower than Chen's own estimates.

The rare forecasts came after TSMC reported a near doubling in first-quarter profit last month as it recovered from last year's chip glut. Analysts have widely expected the company's profit to grow quarter by quarter this year.

Later in the same day, TSMC reported sales of T$27.162 billion for last month, up from T$18.903 billion in April last year and slightly higher than March's T$27.107 billion.

While demand slowed after the year-end shopping season, new generation mobile phones, game machines and flat-screen televisions are gaining popularity, boosting demand for chips.

TSMC has forecast second-quarter sales to rise 2.2 to 4.8 percent from the first quarter, with gross margin up as much as 1.6 percentage points -- a guidance that was more conservative than its rival United Microelectronics Corp. (UMC) <2303.TW>.

UMC , which posted a 33 percent year-on-year gain in April sales on Tuesday, expected second-quarter shipments to rise 5-6 percent from the first quarter, while TSMC saw a smaller 3 percent growth in shipments in the current quarter.

Hurt by losses in U.S. peers, TSMC's ordinary shares slid 2.21 percent to end at T$66.50 on Wednesday, worse than the benchmark TAIEX's <.TWII> 0.87 percent drop. UMC shares lost 4.7 percent to T$21.30.

But so far this year, TSMC has risen 6 percent and UMC was up 15 percent as investors bought into their solid fundamentals.

Output of chips below 130 nanometre circuits would make up 50-55 percent of TSMC's total revenues in the second half of this year, compared with 49 percent in the first quarter. UMC also expected output using advanced technology to grow this year.

Both TSMC and UMC count Texas Instruments Inc. (TI) , the world's top supplier of mobile phone chips, as major clients. (US$=8.007 yuan=T$31.4)

References:

Global Test Website

Kim Eng - Global Test