TSMC reports record high net profit for Q4 2016 (update)

Taipei-Taiwan Semiconductor Manufacturing Co. (TSMC, ???), the world's largest contract chip maker, on Thursday posted a record high net profit for the fourth quarter of last year, citing strong sales in communications and computer devices in the global market.

After reporting record high consolidated sales for the October-December 2016 period on Tuesday, TSMC gave other positive leads at an investor conference Thursday, saying that its net profit for the fourth quarter of last year was NT$100.20 billion (US$3.16 billion), the highest in its history.

The net profit figure also represented a 3.6 percent increase from the previous quarter and a 37.6 percent rise from a year earlier, the company said.

It said its earnings per share for the fourth quarter of 2016 was NT$3.86, compared with NT$3.73 in the third quarter and NT$2.81 a year earlier.

TSMC also reported a 0.7 percent quarterly increase in fourth-quarter consolidated sales to NT$262.23 billion, which was 28.8 percent growth from a year earlier.

The fourth-quarter sales figure beat the company's estimate of between NT$255 billion and NT$258 billion.

For the whole of 2016, TSMC posted NT$334.25 billion in net profit, an EPS of NT$12.89, and consolidated sales of NT$947.94 billion.

"Due to stronger demand for TSMC's 16-nanometer technology and a more favorable exchange rate than our original forecast, fourth- quarter revenue surpassed the high end of our guidance given three months ago," TSMC Senior Vice President and Chief Financial Officer Lora Ho (???) said in a statement.

In the fourth quarter, chips made on TSMC's 16nm and 20nm processes accounted for 33 percent of the company's total sales, up from 31 percent seen in the previous quarter, while chips made on its 28nm process stood at 24 percent, unchanged from a quarter earlier, the chip maker said.

TSMC's gross margin for the fourth quarter rose 1.6 percentage points from the third quarter to 52.3 percent, which came within the company's earlier estimate ranging between 50.5 percent and 52.5 percent. In 2016, its gross margin rose 1.4 percentage points from 2015 to 50.1 percent.

Looking ahead, Ho said that TSMC will feel the pinch of the slow-season effect in the global semiconductor industry in the first quarter of this year.

"Moving into first-quarter 2017, we forecast the demand is weaker than the prior quarter due to mobile product seasonality and slightly above seasonal supply chain inventory at the end of 2016," Ho said.

As a result, she said, TSMC's consolidated sales for the January-March period could range between NT$236 billion and NT$239 billion, down 8.8 percent-10 percent from a quarter earlier. The first-quarter guidance lagged behind an earlier market forecast of a 5 percent-8 percent sequential fall.

In the investor conference, TSMC Chairman Morris Chang (???) said that he expects sales for the first half of this year to grow about 10 percent from a year earlier, and revenue for the second half to rise about 5 percent year-on-year.

For the whole of 2017, TSMC's revenue will grow 5 percent-10 percent from 2016 in U.S. dollar terms, compared with an estimated 7 percent increase for the global pure foundry industry and a forecast 4 percent rise for the world's semiconductor business, Chang said.

Ho said that TSMC's capital expenditure for 2017 is expected to stand at around NT$10 billion.

Chang said that the compound annual growth rate of TSMC's sales and earnings is expected to range between 5 percent and 10 percent during the period of 2015-2020, with its return on equity expected to top 20 percent.

Source: Focus Taiwan News Channel