(Adds Q3 outlook, chairman's comments)
* Q2 net profit up 23.8 pct to record high, beats
* Sees Q3 revenue rise on mid- to low-end smartphone sales
* Sees inventory correction in Q3, suppressing margins
By Clare Jim
TAIPEI, July 18 Taiwan Semiconductor
Manufacturing Co Ltd said it expects sales of cheaper
mobile devices in emerging markets like China to boost its
earnings in the second half, brushing off concerns over slowing
demand for high-end smartphones.
TSMC, the world's top contract chip maker, has been
riding on robust demand for its chips made with 28-nanometre
process technology, which crams more computing power into
smaller micro-circuits, as consumers shift from clunky personal
computers and laptops to smartphones and tablets like Apple
The company said on Thursday it expects third-quarter
revenue to rise to between T$161 billion and T$164 billion ($5.4
billion and $5.5 billion), from T$155.9 billion in the previous
"Contributions from China to our total business will be
doubled this year from last year," TSMC Chairman Morris Chang
told an investor conference.
Chang said shipments of low- and mid-level smartphones would
grow 69 percent and 36 percent respectively in 2013 from from a
year ago, compared with 18 percent growth for top-tier handsets.
However, supply chain inventory in the third quarter would
be higher than expected three months ago as integrated circuit
design companies prepared for major smartphone launches.
As a result, TSMC lowered its forecast for full-year
semiconductor industry revenue growth by 1 percentage point to 3
percent, but lifted its foundry revenue growth forecast by 1
percentage point to 11 percent.
Chief financial officer Lora Ho said an inventory correction
in the third quarter would put pressure on margins.
The company, which controls half of the $34.6 billion global
contract chip market, said its second-quarter net profit rose
23.8 percent from a year ago to a record T$51.81 billion ($1.7
billion), beating forecasts.
TSMC's clients include Qualcomm Inc, Texas
Instruments Inc and Nvidia Corp. In turn, these
firms sell chips to consumer electronics companies like South
Korea's Samsung Electronics Co Ltd and Taiwan's HTC
Corp as well as Apple.
Samsung Electronics and HTC earlier this month posted
second-quarter earnings that fell short of forecasts, deepening
worries that the market for expensive smartphones may have
peaked in the absence of must-have innovations.
Intel Corp, which makes its own chips but has
started to get into the contract making business, cut its
full-year revenue forecast on Wednesday.
Analysts say contract chipmakers' revenue are being squeezed
as consumers, particularly in emerging markets, opt to buy mid-
to low-end phones instead of more expensive handsets.
Shares of TSMC have risen about 10 percent in the year to
date, versus a 6.5 percent rise in the broader market.
(Reporting by Clare Jim; Editing by Stephen Coates)