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TSMC head banks on IC resurgence in Q2 of 2013

Morris Chang, chairman and CEO of Taiwan Semiconductor Manufacturing Co. (TSMC), yesterday reiterated his opinion the integrated circuit (IC) industry will experience a rebound in the second quarter of next year.

Chang made the remarks during TSMC's quarterly investors' conference in Taipei yesterday.

At the event, the firm reported stellar third quarter results, with sales and earnings both reaching new highs.

For the July-September period, the firm had consolidated sales of NT$141.38 billion, a rise of 10.4 percent quarter-on-quarter. Gross profit margin was 48.8 percent, a rise of 0.2 percent from the second quarter. Both sales and gross profit margin were better than market expectations.

Third quarter net profit reached NT$49.3 billion, a rise of 17.9 percent from the second quarter, translating into earnings per share of NT$1.9, beating market expectations.

For the first three quarters, sales totaled NT$374.944 billion, a rise of 16.3 percent from the same period last year. Gross profit margin was 48.4 percent, a rise of 2.7 percent year-on-year. Net profit was NT$124.59 billion, a rise of 21.4 percent year-on-year and translating into EPS of NT$4.81.

As for the fourth quarter, Chang said sales may decline by eight percent from the third quarter to between NT$129 billion and NT$131 billion, due to inventory adjustment measures by clients. Gross profit margin may drop to between 45 percent and 48 percent, and operating margin 33 percent and 35 percent.

He maintained his prediction made back in July that the IC industry will experience a turnaround starting in the second quarter of 2013.

Separately, during a forum earlier in the day, Chang expressed concerns over the widening exchange rate difference between the New Taiwan dollar and the South Korean won.

“The rate difference is about 30 percent over the past five years, translating into an increase in cost of 30 percent,” he said. “We hope the government can take care of this problem.”

He also aired pessimism over the global economy amid political uncertainties in the United States and Europe.

“I don't see the light at the end of the tunnel,” Morris Chang said during a 40-minute panel discussion in Taipei with visiting Nobel Economics prizewinner Christopher Sims.

According to Chang, after the U.S. presidential election in November, the U.S. could face a “fiscal cliff” that could cause a 3-percent decline in that country's economic growth next year.

His “fiscal cliff” refers to U.S. government spending cuts, coupled with significant tax increases in January that could push the economy into recession, he said.

Moreover, the lingering European debt crisis is likely to deteriorate if the political sectors of the major European countries cannot work together to solve their problems, Chang added.

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Morris Chang, chairman of TSMC, speaks to the media on the sidelines of a forum held in Taipei, yesterday. He expressed his concerns over the exchange rate difference between the currencies of Taiwan and South Korea. (CNA)

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