TSMC Earns Record Revenues and Income as 28nm Accounts for Even Larger Portion of Sales

TSMC’s Revenue Rise to $5.53 Billion As Customers Increase Adoption of Leading-Edge Technologies

by Anton Shilov
10/22/2013 | 10:38 PM

Taiwan Semiconductor Manufacturing Co. managed to further post both sequential and annual increase in earnings and profits in the third quarter of 2013 as its customers increased adoption of leading-edge manufacturing technologies. 28nm manufacturing process accounted for one third of the company’s revenue and currently is the technology that brings TSMC the highest share of revenue.


“After five consecutive quarters of growth, communications segment declined by 3% in the third quarter as consumer – customers started to manage down their inventories. Computer segment declined 18%. Consumer segment grew significantly in the third quarter thanks to the strong demand from the game consoles. Meanwhile, industrial and standard-related revenues grew by 5% from the second quarter. Despite the volatilities across different applications, our 28nm continued to grow and contributed 32% of total wafer revenue in the third quarter, up from 29% in the second quarter. Combined with 40nm, the advanced technologies represented 52% of our total wafer revenue,” said Lora Ho, senior vice president and chief financial officer of TSMC.

TSMC: We Control Over 84% of 28nm Foundry Market

According to TSMC, the share of its 28nm process technology on the foundry market is around 84%, which is higher than its 40/45nm, 65nm and 90nm were in their third year of ramp. TSMC’s market share of the 28nm SiON version is about 75% this year; 28nm high-K metal gate manufacturing technologies have market share above 90%, the company claims.

“In 28nm oxynitride solution, we have a couple of competitors. But TSMC delivers higher performance, better yield and shorter cycle time, which helps mitigate customers' inventory risk. […] In 28nm high-K metal gate solution, we have little competition,” said Morris Chang, chief executive officer and chairman of TSMC.

Shipments of 28nm process technology reached 32% of total wafer revenues. 40/45nm accounted for 20% of total wafer revenues. Advanced technologies, defined as 40/45nms and more advanced technologies, accounted for 52% of total wafer revenues.

TSMC Keeps Boosting Capacities

During the third quarter of 2013 TSMC’s total capacity increased 6.5% to around 4.258 million of 200mm equivalent wafers and will increase again slightly in Q4 2013. 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$162.58 billion ($5.533 billion), net income of NT$51.95 billion ($1.768 billion), and diluted earnings per share of NT$2.00 (US$0.34 per ADR unit) for the third quarter ended September 30, 2013. Gross margin for the quarter was 48.5%, operating margin was 36.7%, and net profit margin was 32%.

Year-over-year, third quarter revenue increased 14.9% while net income and diluted EPS both increased 5.2%. Compared to second quarter of 2013, third quarter of 2013 results represent a 4.3% increase in revenue, and a 0.3% increase in net income.  The results included a NT$1.35 billion write-off of investment in Stion which reduced the third quarter EPS by NT$0.05. In US dollars, third quarter revenue increased 4.1% from the previous quarter and increased 14.8% year-over-year.

At present, TSMC expects Q4 2013 revenue to be between NT$144 billion and NT$147 billion ($4.901 billion and $5.0 billion), gross profit margin to be between 44 % and 46% and operating profit margin to be between 32% and 34%.