* Q4 net profit T$41.6 bln, in line with analysts' forecasts
* Sees Q1 revenue T$127-129 bln, down slightly from Q4
* Plans record annual capital expenditure of $9 bln
* Shares end flat prior to results vs market's 1 pct fall
By Clare Jim
TAIPEI, Jan 17 Taiwan Semiconductor Manufacturing Co Ltd (TSMC) reported a 32 percent rise in fourth-quarter profit as its cutting-edge technology keeps it ahead of rivals in the mobile gadget boom.
Chips made by TSMC's 28-nanometre process technology, which can cram much more computing power into smaller chips, are widely sought after as consumers shift to devices like Apple Inc's iPad and iPhone and away from personal computers.
Net profit for the world's biggest contract chipmaker in the October-December period was T$41.6 billion ($1.4 billion), in line with the T$41.3 billion average estimate of 23 analysts polled by Thomson Reuters I/B/E/S.
The figure compares with T$49.3 billion in the third quarter and T$31.6 billion for the same quarter a year ago.
TSMC said it expects first-quarter revenue to decline to between T$127 billion and T$129 billion, versus the fourth quarter's T$131.3 billion, largely due to seasonal factors. The fall was previously flagged by TSMC Chairman Morris Chang who has said that he expects a rebound from April and has predicted 2013 revenue growth of 15-20 percent.
The company also expects inventory levels to dip in the first quarter.
Seeking to keep its edge in small chips, TSMC said last month it plans to boost its annual capital spending to a record $9 billion, from $8.3 billion. But it also faces intensifying competition as rivals such as Global Foundries, Intel and United Microelectronics Corp seek to catch up in technology and capacity.
TSMC's clients include Qualcomm, Texas Instruments and Nvidia.
Samsung Electronics, the world leader in mobiles and memory chips, said last week it likely earned a quarterly profit of $8.3 billion on strong smartphone sales of its Galaxy range. A recovery in chip prices and flat screens should also boost component earnings, analysts said.
Before the results announcement, TSMC shares closed flat, outperforming the broader market's 1 percent fall.
The shares gained 28 percent last year, compared with a 9 percent rise for the broader market.