While most companies in the IT industry are lowering forecasts in the face of increasing economic pressure, as well as disruptions caused by last Tuesday's terrorist attacks, Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) has decided to raise its forecast for the third quarter.
TSMC announced Friday that it expects to beat its previous guidance for the quarter, which ends Sept. 30. Although its expectations still reflect figures that would be only a fraction of the results from a year earlier, the world's largest contract chip maker said in a statement that the third-quarter results will show an upward trend that it expects to continue into the fourth quarter.
TSMC, which counts Via Technologies Inc. and Transmeta Corp. among its customers, now expects its operating income for the quarter to be at least five times the operating income for the second quarter ended June 30. That would bring the figure to NT$1.42 billion(US$43 million). In the second quarter, the company's operating income -- income from its core activities -- was NT$284 million. TSMC manufactures semiconductor wafers in various sizes, which are the building block for chips used in everything from PCs to mobile phones.
The company anticipates continued growth in the fourth quarter, TSMC said. The company's orders from September through the end of the year show a high concentration of high-end and more profitable products, it said. Also, in July and August, TSMC's operating income outperformed the company's previous forecast growth rate, it said.
Although the news may be a sign of a turn-around from the bleak state of the semiconductor industry, it mainly shows how bad things were during the second quarter, one analyst said. "A couple of companies have been reporting lately that they are getting more orders than they are losing through cancellations, which was a problem (in the second quarter)," said Nathan Brookwood, principal analyst with Insight 64 in Saratoga, California.
The recent terrorist attacks in the U.S. also may have caused an increase in certain chip markets, Brookwood said. But while mobile phones and other wireless devices have become more popular, with consumers purchasing them in case of emergencies, that buying trend is unlikely to carry over to the PC market, he said.
"The chances of a near-term PC recovery are looking slimmer and slimmer even with (Microsoft Corp.'s) Windows XP coming," he said. "It's a result of a lot of uncertainty both on the consumer side and the business side of the market."
In July, the company announced that its second-quarter profit had fallen nearly 98 percent from the same quarter last year because of soft demand in the semiconductor market.