Taiwan chipmaker TSMC sees third quarter profits decline

TSMC’s full- year revenue growth will reach 10 percent, he said. Growth in China alone will be just 1.2 percent this year, compared with 19.7 percent last year, it said. TSMC guided its capital expenditure to between $11.5 and $12 billion at the beginning of the year, but cut the target to $10.5 billion in April.

“Due to a weaker global economy, a stronger USA dollar environment and a volatile financial market, the electronic device market has been negatively impacted, resulting in a lack of growth”, co-Chief Executive Officer Mark Liu said.

Ho said TSMC had lowered its estimate partly due to the sluggish demand outlook from China, where the economy is growing at its slowest pace in almost a quarter of a century, and not because of a loss in client orders.

Net income for the three months ended September 30 fell 5.1 percent to 75.33 billion Taiwanese dollars ($2.3 billion) from the previous quarter even as revenue rose to 3.4 percent sequentially to 212.5 billion Taiwanese dollars ($6.67 billion). The street had expected NT$211.9 billion in sales. Advanced technologies, defined as 28nm and more advanced technologies, accounted for 48% of TSMC’s total wafer revenues in the third quarter.

TSMC shares had risen 2.6% to NT$140 at Thursday’s close ahead of the earnings announcement.

TSMC forecast consolidated revenues will fall to between NT$201 billion and NT$204 billion in the fourth quarter of 2015, while gross margin and operating margin will be between 47.5% and 49.5% and 36.5-38.5%, respectively.

Liu said the firm expects to see the global smartphone market expand by 10% this year, but forecasts no growth in the semiconductor industry because of a large build-up in inventories. A few uncertainties may prevent inventory returning to a normal seasonal level by the end of this year as expected.