Taiwan Semiconductor Manufacturing Company said that in the second quarter of 2012 sales of wafers processed using 28nm manufacturing technology contributed to 7% of the company's revenue, which means an increase of supply by nearly 70% (if actual revenues are taken into account). Potentially, it means substantial boost of 28nm supply by TSMC, even though it is obvious that the demand still by far exceeds supply.
TSMC to Continue Boosting 28nm Output
"This year, every quarter, the major effort has been to ramp up 28nm and in doing so of course we did incur a lot of costs. As a result, the gross margin of 28nm all year this year will not be up to the corporate average standard. [...] 28nm is progressing very well," said Morris Chang, chief executive officer of TSMC, during a recent conference call with financial analysts.
28nm process technology accounted for 7% of total wafer revenues, meeting TSMC's internal plans. 40nm accounted for 28% of total wafer revenues, and 65nm was 26%. The advanced technologies accounted for 61% of total wafer revenues.
"Our output and our yields are both above the plans that we set for ourselves and the plans that we communicated to our customers early in the year. [...] We expect to ramp up to about 68 thousand 300mm wafers per month by the end of the year," claimed Mr. Chang.
68 thousand 300mm wafers processed using 28nm manufacturing technology is a very high number.Back in Q1 2012 the world's largest contract maker of semiconductors mainly produced chips using 28LP (SiON) process technology, whereas companies like Nvidia Corp. blamed it for inability to supply processors manufactured at 28HP node that utilized high-k metal gate (HKMG) technology. TSMC projected to boost output of 28HP chips to 50% of all 28nm output by the end of the year. Unfortunately, the company did not reveal the split between 28nm SiON and 28nm HKMG process technologies planned today.
"First quarter of 2013 on, we will fully meet the 28nm demand. It is also then that we expect that the 28nm gross margin will catch up with the corporate average," added Mr. Chang.
TSMC Expects to Further Increase Revenues
“Due to continuing strong demand for our 28nm technology, we expect to double the shipments of 28nm in the third quarter. This increase in 28nm business will account for more than 80% of revenue growth in the third quarter,” said Lora Ho, SVP and Chief Financial Officer of TSMC.
TSMC recently announced consolidated revenue of NT$128.06 billion, net income of NT$41.81 billion, and diluted earnings per share of NT$1.61 (US$0.27 per ADR unit) for the second quarter ended June 30, 2012. Year-over-year, second quarter revenue increased 15.9% while both net income and diluted EPS increased 16.3%. Compared to first quarter of 2012, second quarter of 2012 results represent a 21.4% increase in revenue, and a 24.9% increase in both net income and diluted EPS. Gross margin for the quarter was 48.6%, operating margin was 36.5%, and net margin was 32.7%.
For the third quarter 2012 TSMC expects revenue to be between NT$136 billion and NT$138 billion; gross profit margin is expected to be between 46% and 48%; operating profit margin is expected to be between 34% and 36%.