* Taiwan chip maker sees Q4 revenue down up to 11 pct on qtr
* Chairman sees softer demand for some high-end smartphones
* TSMC still expects double-digit sales growth in 2014
By Clare Jim
TAIPEI, Oct 17 Taiwan Semiconductor
Manufacturing Co Ltd , the world's biggest
contract chip maker, warned chip sales will fall sharply in the
coming three months as mobile device makers rein in new product
launches and high-end smartphone sales weaken.
While a surge in gadget sales helped TSMC's third-quarter
net profit grow more than 5 percent, companies like Apple Inc
, Samsung Electronics and other smartphone
makers will order fewer new parts, including chips, as they run
down stocks and begin lining up new models.
TSMC said on Thursday it expects fourth-quarter revenue to
drop up to 11 percent to between T$144 billion and T$147 billion
($4.90 billion and $5.00 billion), down from T$162.58 billion in
the previous quarter. It previously said October-December
revenue might fall more than 7 percent compared with the
previous three months.
"The mobile product boat is slowing down," TSMC's chairman
and chief executive officer, Morris Chang, told an investor
conference in Taipei. He said the drop in fourth-quarter revenue
is "mainly due to softer demand for certain high-end smartphones
and inventory correction."
The third quarter is typically a high water mark for chip
companies as device makers bring new products onto the market
ahead of the year-end holiday season, a key time for gadget
sales. TSMC also experienced a dip in sales in the fourth
quarter last year as companies ran down supply inventories.
Earlier on Thursday the company reported net profit for the
third quarter beat analysts' forecasts, rising to a quarterly
record of T$51.95 billion. Revenue during the period was
STRONG 2014 FORECAST
Beyond a weaker fourth quarter, Chang said he expects 2014
to be another year of double-digit percentage sales growth for
TSMC, whose shares have climbed about 8 percent in the year to
date versus a 7.7 percent rise in the broader Taiwan market
Chang confirmed that he will hand over his CEO role to a new
incumbent by June next year, but plans to stay on as chairman
with a hands-on say in running the business.
For the semiconductor industry as a whole, Chang said he
expects growth of 4 percent in 2013, compared with a previous
forecast of 3 percent, driven by stronger global sales of memory
chips -- a segment Samsung dominates. TSMC itself doesn't make
The Taiwanese company has been riding high over past three
years on strong chip sales fuelling the global boom in mobile
computing, helping it retain its lead in the race to build the
tiniest and most powerful chips for clients. The company
controls half of the $34.6 billion global contract chip market.
TSMC's direct clients are chip designers such as Qualcomm
Inc, Texas Instruments Inc and Nvidia Corp
. In turn, the firms then sell chips to smartphone
makers like Samsung and Apple.
"The fourth quarter is right now kind of being a flaky
quarter. We have seen signs of people slowing their
semiconductor chip production significantly," said Dean Freeman,
a vice-president at tech research company Gartner, speaking
ahead of TSMC's forecast.
"A lot of it just depends on how the consumer feels with
respect to spending money, and right now if you look at the data
coming out of the United States, the consumer's not feeling very
frisky. They've really retrenched."