Taipei: Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) have raised concerns about the recent appreciation of the Taiwan dollar and its potential negative impact on their profit margins.
According to Focus Taiwan, the Taiwan dollar surged by NT$0.953 to close at NT$31.064 against the U.S. dollar on Friday, marking a 3.07 percent increase. This rise represents the largest single-day gain since 2002, primarily driven by substantial foreign capital inflows. TSMC reported that for every 1 percent appreciation in the Taiwan dollar, its operating margin could decline by 0.4 percentage points. Despite these challenges, TSMC is maintaining its second-quarter revenue forecast of US$28.4 to US$29.2 billion, based on an assumed exchange rate of NT$32.5 to US$1, with expected gross and operating margins of 57-59 percent and 47-49 percent, respectively.
UMC also acknowledged the impact of the Taiwan dollar's appreciation on its profits, although it described the effect as relatively limited. Similar to TSMC, UMC estimates that each 1 percent appreciation reduces its gross margin by 0.4 percentage points. The company employs a natural hedging strategy by quickly converting U.S. dollar payments into Taiwan dollars to manage exchange rate risks.