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September 22, 2017

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TSMC forecasts growth of 16-17% for second quarter

TAIPEI, Taiwan -- TSMC announced an optimistic forecast for the second quarter during a conference call yesterday, indicating quarterly growth of 16 to 17 percent, exceeding forecasts.

With total second-quarter revenues projected to reach between NT$154 billion and NT$156 billion, TSMC Chairman Morris Chang stated that the second quarter will be propelled by the rapidly growing demand for telecommunication and mobile devices, which require the company's 28-nanometer fabrication technology. This favorable trend is likely to continue, added Chang.

The company in the first quarter recorded revenues of NT$132.76 billion, net income of NT$39.5 billion, and earnings-per-share of NT$1.53, with revenues and net income increasing 25.7 and 18.2 percent, respectively, on a year-on-year basis.

The company's gross profit margin for the second quarter is estimated to reach between 47.5 and 49.5 percent, up by 1.7 to 3.7 percent quarter-on-quarter, with operating profit margin reaching 35 to 37 percent, according to TSMC Senior Vice President Lora Ho (何麗梅).

The semiconductor industry is expected to grow by 10 percent this year, said Chang, a figure that has been elevated from previous estimates, according to reports. In addition, propelled by rising prices observed in the memory sector, the gross industrial output value of the entire semiconductor sector is expected to grow by 4 percent, exceeding the 3 percent which was previously forecast. The company's main foundry division is expected to grow by 10 percent this year, up from previous estimates of 7 percent, said Chang. The company's overall performance at the end of 2013 will likely grow at 10 percent, exceeding its foundry divisions, added Chang. For the integrated circuit (IC) design sector, Chang forecast this year's growth at 9 percent.

Shares of TSMC experience tepid exchanges throughout yesterday's trading session, down NT$0.1, or 0.10 percent, and closing at NT$99.90 per share, with the intra-day volume exceeding 32.242 million shares.

TSMC Ramps Up Capex

Meanwhile, the company announced that its capital expenditure allocation will be raised from US$9 billion to US$10 billion, in-line with the expectations of industry observers. The company yesterday explained that additional capital expenditures are required for the development of 20- and 16-nm-based FinFET technology. According to Chang, the next-generation 20-nm fabrication process will begin mass-production by the first quarter of next year, while supplies for its 14-nm variant will be available in the first quarter of 2014, pending market response.

However, according to commentators, the industry is rife with rumors of a strained relationship between long-time partners TSMC and U.S.-based Altera, maker of programmable logical devices. According to reports, Altera chose Intel's 14-nm FinFET solution over TSMC's offerings, with the latter being awarded the contract for the 55-nm variant. The two companies were reported to have expressed indifference toward ongoing rumors.

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