TSMC sees Q3 profits ravaged by industry slowdown

Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chip maker, today reported that its net income during the third quarter totaled NT$1.2 billion ($72.4 million as of Sept. 30, the last day of the quarter being reported), a 93.8 percent drop compared to the same period last year. Net sales during the third quarter declined 43.3 percent to NT$26.9 billion, the company said.

TSMC blamed the precipitous drop in net income and net sales on "soft demand" in the global chip market. However, the company said a drop in net sales hit bottom during the second quarter. Third-quarter results showed a 2.4 percent sequential increase in net sales, it said.

Tough times for the chip industry aren't expected to end soon, however.

World Semiconductor Trade Statistics GmbH (WSTS), a nonprofit association of chip makers, announced on Oct. 22 that global semiconductor sales in 2001 are expected to decline by 32.1 percent to US$138.8 billion. That estimate is significantly lower than the group's earlier prediction, issued in May, which forecast a decline of 13.5 percent and a total market size of US$176.8 billion.

WSTS lowered its 2001 estimate to reflect a greater-than-expected decline in semiconductor sales during the second quarter and the belief that third-quarter sales would fall even further.

The revised forecast for 2001 assumes that a moderate upturn of the market will occur during the fourth quarter of 2001 and last into 2002, WSTS said. Global semiconductor sales are expected to rise 2.6 percent during 2002, it said. Beyond 2002, WSTS expects to see semiconductor sales grow 18.5 percent in 2003 and 15.1 percent in 2004.

Despite projections of sustained growth in the coming years, WSTS expects that industry revenues in 2004 will fall short of 2000 levels, reflecting the severity of the recent downturn in semiconductor sales.

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