TSMC optimistic for expansion in '13

It also plans to increase its R&D department from 3,400 to 3,900 personnel to keep up with the rapidly growing mobile communications market.

TSMC Chairman and CEO Morris Chang expressed optimism for this year, estimating global GDP growth of 2.6 percent; 4.3 percent for the semiconductor industry, 9 percent for fabless manufacturing, 7 percent for foundries and well over 7 percent for TSMC.

However, the company is anticipating a slight decline in the first quarter due to seasonal factors, with revenues predicted to dip to between NT$127 billion and NT$129 billion.

“We now expect the supply chain inventory days of inventory (DOI) to decline only slightly in the first quarter, and our revenue will also decline only slightly in the first quarter from the previous quarter,” said Lora Ho, SVP and chief financial officer of TSMC.

DOI was increased by six days to 50 days during the fourth quarter last year due to the higher level of work-in-process projects for 28-nanometer (nm) ramping and increased stocks in raw materials.

Ho also said that overall revenue growth this year will be offset by higher tax rates, with the effective tax rate in 2013 and 2014 climbing to about 14 percent from 8.7 percent in 2012, citing the levying of capital gains and alternative minimum tax by the ruling Kuomintang.

Chang indicated that for the immediate future, the 28-nm chips will be the strongest driver for TSMC, and that the company will utilize its leading position in the industry to continue its relentless pursuit of Moore's Law (fitting ever more transistors onto integrated circuits).

For the fourth quarter of last year, TSMC reported revenues of NT$131.31 billion, representing 30.2-percent growth year-on-year.

The company has benefitted from the rapidly growing mobile communication device market, with clients including Apple, HTC, NVIDIA and Qualcomm.

Communication application contributed to 54 percent of total revenues, greatly exceeding other categories such as computer, industrial/standard and consumer in the fourth quarter. Shipments of 28-nm process technology represented 22 percent of total wafer revenues, which was described by Chang as a resounding success for the fourth quarter.

Chang also reiterated long-term plans of developing advanced 20-nm and 16-nm FinFET fabrication, stating that he expects the 20-nm system-on-a-chip output, set to begin in 2014, to outstrip the volume of 28-nm chips by the end of 2015. Many in the industry suspect that the 16-nm FinFET chips will be designated for future Apple products.

Shares of TSMC closed flat yesterday, outperforming the index's 1-percent decline.

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