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Taiwan Semiconductor Manufacturing Company on Thursday reported its financial results for the Q4 2010. While the company reported a sequential decline in revenue, the firm said that shipments of chips using advanced process technologies increased rather firmly quarter-to-quarter. As a result of growing demand towards leading-edge fabrication processes, TSMC increased its capex to whopping $7.8 billion.

In the fourth quarter, demand for TSMC’s wafers remained strong, with increases in wafer shipments in communication segment offsetting decreases in computer and consumer segments. 40nm process technology accounted for 21% of total wafer revenues and were up 21% quarter-over-quarter; 65nm accounted for 31%. These advanced technologies exceeded 50% of total wafer sales for the first time and accounted for 52% of total revenues.

Considering the fact that ATI, graphics business unit of Advanced Micro Devices, reported an increase in sales of its DirectX 11-supporting GPUs last week, it looks like the yields of 40nm process tech at TSMC are high enough. This is the reason why the company can post a significant increase in 40nm wafers revenue.

Due to the increase of demand towards 40nm and thinner process technologies as well as necessity to produce those advanced chips in very high volumes, TSMC will increase its capital expenditures to about $7.8 billion in 2011, which will allow the company to drastically increase its state-of-the-art production capacities.

Process Technologies as Percentage of TSMC's Revenue in Recent Quarters

 

Q1 2009

Q2 2009

Q3 2009

Q4 2009 

Q1 2010

Q2 2010

Q3 2010

Q4 2010

150nm+

35%

35%

33%

30%

29%

28%

28%

n/a

130nm/110nm

16.66%

13%

14%

15%

13%

13%

14%

n/a

90nm/80nm

25%

23%

18%

16%

17%

16%

12%

n/a

65nm/55nm

23%

28%

31%

30%

27%

27%

29%

31%

40nm

0.33%

1%

4%

9%

14%

16%

17%

21%

Year-over-year, fourth quarter revenue increased 19.6% while net income increased 24.7% and diluted EPS increased 24.6%. Compared to third quarter of 2010, fourth quarter results represent a 1.9% decrease in revenue, 13.2% decrease in net income and 13.3% decrease in diluted EPS. In US dollars, fourth quarter revenue grew 3.1% from third quarter 2010 and 27.2% year-over-year.

TSMC’s consolidated revenue in Q4 2010 were NT$110.14 billion ($3.7881), net income was NT$40.72 billion ($1.4 billion), diluted earnings per share were NT$1.57 (US$0.26 per ADR unit). Gross margin for the quarter was 49.8%, operating margin was 37.7%, and net margin was 37%.

“For the first quarter of 2011, we expect the demand to be stronger than seasonal. Based on our current business outlook and exchange rate assumption, management expects overall performance for first quarter 2011 to be as follows,” said Lora Ho, senior vice president and chief financial officer of TSMC.

In Q1 2011 revenue is expected to be between NT$105 billion and NT$107 billion ($3.611 - $3.680 billion); gross profit margin is expected to be between 47% and 49%; operating profit margin is expected to be between 35% and 37%. 

Tags: TSMC, Semiconductor, 40nm, 65nm, 55nm, 80nm, 90nm, 130nm, 150nm, Business

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