TSMC sees another weak quarter as smartphone woes persist

  • Business
  • Friday, 19 Apr 2019

TAIPEI: Taiwan Semiconductor Manufacturing Co (TSMC) is predicting another weak quarter for revenue growth, as the chipmaker to Apple Inc and Huawei Technologies Co grapples with global smartphone market malaise.

The world’s largest made-to-order chipmaker is predicting revenue of US$7.55bil to US$7.65bil in the June quarter, versus an average estimate for US$7.6bil and little changed from a year earlier. Yesterday, TSMC reported a larger-than-anticipated 32% plunge in net income during the January to March period.

TSMC is showing the strains of a plateauing smartphone market as Apple, its biggest customer, seeks to boost growth with services rather than hardware. That’s compounding the challenge of dealing with Chinese customers experiencing a slowdown and weaker demand ahead of new fifth-generation wireless networks. Global smartphone volumes are expected to drop 0.8% this year, according to research firm IDC.

Net income fell to NT$61.4bil (US$2bil) in the three months ended March, the Hsinchu, Taiwan-based company said. That compares with the NT$64.6bil average analyst estimate. It previously disclosed sales in the first quarter of NT$218.7bil.

The Taiwanese chipmaker’s output in the past quarter was affected by a chemical contamination incident that led the company to cut its guidance, just a few months after a virus disrupted production. For 2019, TSMC is sticking to its plan for US$10bil to US$11bil in capital spending.

“TSMC’s operating margin may have narrowed in the first quarter as demand for semiconductor products weakened as trade tensions between China and the US continued,” Simon Chan, an analyst at Bloomberg Intelligence, wrote in an April 11 note. — Bloomberg


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