Taiwan Semiconductor Mfg. Co. Ltd (NYSE:TSM): Riding the mobile wave in Q3
There was a record rise of 24% in Taiwan Semiconductor Mfg. Co. Ltd (NYSE:TSM)’s net profit in comparison to the previous year. No doubt, the company’s results have been robust but it has projected flat margins in the Q3. The demand for its high-performance chips has increased, but the company has also warned of a pile-up of inventory. Analysts continue being bullish on TSM’s growth prospects as the mobile market has seen healthy share gains.
Steady now, drop later
Chairman Morris Chang said that the record Q3 revenue will be followed by a revenue drop on a quarterly basis in the Q4, primarily due to weakening in the PC sales. Today , the demand is for powerful and smaller chips as these are the ones that are used in smartphones and tablets. These chips help in adding energy efficiency to mobile devices and it makes them sleeker as well. At the start of this month, some people in the know had told the Wall Street Journal that Apple had signed an agreement with Taiwan Semiconductor.
Via this agreement, starting in 2014, the chip maker will be manufacturing some of the highly sophisticated chip brains that are incorporated into iPhones and iPads. Mr. Chang said that TSM is right on path with expanding into 20-nanometer production. This will allow them to manufacture even more power-efficient and small semiconductors. The mass production is expected to commence at the start of next year. The projection is that the chips will make up a single-digit percentage of TSM’s 2014 revenue.
By revenue, Taiwan Semiconductor Mfg. Co. Ltd (NYSE:TSM) is the largest chip maker in the world. It counts AMD, Qualcomm as well as Texas Instruments amongst its clients. The projected Q3 revenue is to be in the range of 161B New Taiwan dollars (US$5.41 billion)- NT$164B, which is higher than NT$155.89B in the Q2.