TSMC cuts 2018 revenue growth forecast, expects 8% Q3 sales rise

Taipei, Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, said Thursday it has lowered its forecast of year-on-year sales growth for 2018 to 7-9 percent and expects revenue for the third quarter to increase by 8 percent from the previous quarter.

At an investor conference, TSMC Chief Executive Officer and Vice Chairman C.C. Wei (???) said the decision to cut the 2018 sales forecast from 10 percent largely reflects weakening demand for chips used in mining devices for cryptocurrency transactions.

It was the second time TSMC, which is believed to be a major supplier of chips used in mining devices, has downgraded its 2018 sales growth forecast. In April, the chipmaker lowered its sales growth forecast from 10-15 percent to 10 percent.

TSMC has also lowered its capital expenditure forecast for 2018 from US$11.5 billion-US$12 billion to US$10 billion -US$10.5 billion, a reflection of slower demand.

Wei said falling demand for mining devices is expected to affect TSMC's sales in the third quarter, which will compromise peak season effects in the three-month period.

As a result, Wei said TSMC's consolidated sales for the July-September period are expected to range from US$8.45 billion to US$8.55 billion, with the expected median of US$8.5 billion, about 8 percent higher than the US$7.85 billion posted in the second quarter.

However, demand for the company's advanced 7 nanometer process remains solid as clients are launching new products to boost shipments of graphic chips used in gaming computers and chips used in artificial intelligence, Wei said.

The guidance was given by TSMC after the chipmaker announced net profit of NT$72.29 billion (US$2.36 billion) for the April-June period, down 19.5 percent from the first quarter.

Ahead of the investor conference, which was closely watched by investors, an Asia-based brokerage said TSMC is not expecting to feel much of peak season effects in the third quarter, as demand for chips for low-end smartphones has been on the decline in addition to weaker demand for chips used in mining devices.

TSMC's third-quarter guidance was within the brokerage's forecast of a sequential increase of less than 10 percent.

As for the global wafer foundry industry, Wei said TSMC has also lowered its sales growth forecast from 8 percent to 7 percent, while the company has left unchanged its forecast of 5 percent sales growth for the global semiconductor business, excluding memory firms, for 2018.

Meanwhile, TSMC Senior Vice President and Chief Financial Officer Lora Ho (???) said the company has no plan to take any of its China-based subsidiaries public with a Chinese yuan-denominated listing in Shanghai.

Ho answered the China listing question after TSMC rival United Microelectronics Corp., the second-largest contract chipmaker in Taiwan, announced in late June that it plans to sell shares in a subsidiary based in China -- Hejian Technology (Suzhou) Co. Ltd. -- through an initial public offering in Shanghai.

Commenting on the growing trade friction between the United States and China, Ho said that is not expected to impact TSMC's operations.

CNA cannot identify the names of the brokerages cited because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price-moving forecasts for specific stocks or for the wider market.

Source: Focus Taiwan News Channel