TSMC’s Sales of 28nm Chips in Fourth Quarter Totaled Nearly $1 Billion

28nm Chips Now Represent Nearly a Quarter of TSMC’s Wafer Revenue

by Anton Shilov
01/21/2013 | 09:30 AM

Taiwan Semiconductor Manufacturing Co. last week reported its financial results for Q4 2012 as well as for the whole year. While for calendar 2012 the company posted a sequential increase of revenue, in the Q4 its sales were lower than sales in Q3 2012. Still, the contract maker of semiconductors managed to significantly boost shipments of chips made using 28nm process technology. In Q4 alone TSMC increased sales of wafers processed at 28nm node by nearly 50%.

28nm Wafers Account for 22% of TSMC’s Total Revenue

 

“28nm technology was a resounding success. The production in 2012 increased more than 30-fold over 2011. We have enjoyed throughout the year, in spite of a lot of attempt to the competition, we enjoyed throughout the year close to 100% foundry market share in 28nm technology,” said Morris Chang, chief executive and chairman of TSMC, during a conference call with financial analysts.

Shipments of 28nm process technology reached 22% of total wafer revenues. 40nm accounted for 22% of total wafer revenues, and 65nm was 19%. These advanced technologies accounted for 63% of total wafer revenues.

In Q4 2012, TSMC earned nearly a billion dollars - $996.935 million to be exact (or NT$28.8882 billion) – selling wafers processed using one of the company’s four 28nm process technologies. The company admits that the most simplistic version of the 28nm processes – CLN28LP with SiON (silicon oxynitride) – was the most popular among the company’s fabless customers. However, going forward TSMC expects higher-end 28nm with high-K metal gate (HKMG) to prevail.

“Last year, the majority of the [28nm] production was the silicon-oxynitride[-based CLN28LP]. But the more advanced versions [with] high-k metal gate will surpass oxynitride in the third quarter this year and in the fourth quarter, it will surpass [CLN28LP] even more,” explained Morris Chang.

The demand towards chips made using leading-edge 28nm, fabrication process is so high that TSMC has all of its production capacities utilized at 100% and that will continue in 2013, according to the management of the company.

Manufacturing Capacities Continue to Grow

“As we continued adding capacity for 28nm process technology, our total capacity increased 4% to around 4 million 200mm-equivalent wafers in the fourth quarter. For the full year, our 300mm capacity had increased by 21% and the total annual capacity increased by 14% to reach about 15 million wafers. We expect the total capacity to continue increase, but to decrease slightly by 1.2% in the first quarter of 2013 due to fewer working days and scheduled maintenance,” said Lora Ho, senior vice president and chief financial officer of TSMC.

For the fourth quarter of 2012, TSMC announced consolidated revenue of NT$131.31 billion ($4.527 billion), net income of NT$41.57 billion ($1.4332 billion), and diluted earnings per share of NT$1.61 (US$0.28 per ADR unit) for the fourth quarter ended December 31, 2012. Year-over-year, fourth quarter revenue increased 25.4% while net income and diluted EPS increased 31.6% and 31.8%, respectively. Compared to third quarter of 2012, fourth quarter of 2012 results represent a 7.1% decrease in revenue, a 15.7% decrease in net income, and a 15.6% decrease in diluted EPS. All figures were prepared in accordance with R.O.C. GAAP on a consolidated basis. Gross margin for the quarter was 47.2%, operating margin was 35.2%, and net margin was 31.7%.

For Q1 2013, TSMC expects revenue to be between NT$127 billion ($4.3785 billion) and NT$129 billion (4.4475 billion); gross profit margin to be between 43.5% and 45.5% and operating profit margin to be between 31.5% and 33.5%. TSMC further expects the capital expenditures for 2013 to be about $9 billion.