Taiwan Semiconductor Manufacturing Co. recently posted its financial results for the second quarter of the year. Exactly 50% of revenue the company got from wafers processed using two of its latest technologies, such as 40nm and 28nm. The company also reported significant year-over-year and quarter-over-quarter revenue increases, a good news not only for TSMC, but also for the industry.
“On a quarter-over-quarter basis, revenue increased across the board of all major segments. Communication again showed the strongest growth of 22%, followed by computer, 18%, industrial 11%, and consumer, 9%. In terms of revenue by technology, as 28nm continued to ramp successfully, the revenue contribution has significantly increased to 29% in the second quarter, from 24% in the first quarter. Riding on the success of 28nm, revenue from advanced technologies, defined as 40nm and below, now already represents 50% of our total wafer revenue,” said Lora Ho, senior vice president and chief financial officer of TSMC.
28nm: Ahead of Competitors in Volumes, Yields and Performance
Sales of wafers processed using 300mm process in Q2 2013 were around $1.5 billion, or whopping $500 million up from Q4 2012.
TSMC’s 28nm shipments on track to triple in wafer sales this year. If last year the vast majority of wafers were processed using relatively simplistic SiON-based CLN28LP process tech, then this year a lot of chips will be made using high-K metal gate-based CLN28HP, CLN28HPM and CLN28HPL manufacturing technology. TSMC expects the number of 28nm HKMG wafers to exceed the number of SiON-based 28nm wafers in Q3 2013.
“For the high-K metal gate solution, we do not have any serious competitors yet. We believe we have a substantial lead in performance. If you recall, ours is a gate-last version, and our competitors are mainly in the gate-first version. So with 28nm HKMG, we have a lead in power, our power is lower; in performance, our performance is better; and should the competitors who are in gate first now switch to gate last, they will be considerably behind us in yield learning, in yields. Our continued lead in yield and performance will keep our 28 nanometer market segment share strong for both this year and in future years,” said Morris Chang, chief executive officer and chairman of TSMC, during a conference call with financial analysts.
TSMC Continues to Boost Capacities
During the second quarter of 2013 TSMC’s total capacity increased 3% to around four million 200mm equivalent wafers and will increase by another 6.5% to 4.3 million wafers in the third quarter. For the full year, TSMC’s 300mm capacity is expected to increase 17% year over year and the total annual capacity will grow 11% to 16.4 million 200mm-equivalent wafers.
Results and Expectations
TSMC announced consolidated revenue of NT$155.89 billion ($5.1963 billion), net income of NT$51.81 billion ($1.727 billion), and diluted earnings per share of NT$2.00 (US$0.33 per ADR unit) for the second quarter ended June 30, 2013.
Year-over-year, second quarter revenue increased 21.6% while net income and diluted EPS both increased 23.8%. Compared to first quarter of 2013, second quarter of 2013 results represent a 17.4% increase in revenue, and a 30.9% increase in both net income and diluted EPS. Gross margin for the quarter was 49.0%, operating margin was 37.0%, and net profit margin was 33.2%.
Based on TSMC’s current business outlook and exchange rate assumption of $1 to 29.83 NT dollars, management expects Q3 2013 revenue to be between NT$161 billion and NT$164 billion; gross profit margin to be between 47% and 49% and operating profit margin to be between 35% and 37%.