TSMC sees 2001 income sink, brighter times ahead

Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), the world's largest contract semiconductor maker, saw a sharp fall in revenues and profits in 2001 as the worldwide semiconductor industry witnessed low demand. Results issued by the company Friday however pointed to a recovery in the final quarter of the year as TSMC said shipments and prices are both rising.

The company said unconsolidated net income in the 2001 totaled NT$14.5 billion (US$412.8 million), a drop of 77.8 percent on the previous year. Unconsolidated net sales fell 24.3 percent to NT$125.9 billion, operating income sank 71.4 percent to NT$17.3 billion and pretax income dropped 83.3 percent to NT$10.7 billion. TSMC compiles its figures in accordance with generally accepted accounting principles in Taiwan, it said in a statement.

At the same time as it announced full-year results, the company also detailed operating results from the final quarter of the year. Net sales in the fourth quarter were 23 percent higher than the third quarter as shipments, expressed as eight-inch equivalent wafers, rose from 448,000 to 558,000 wafers and average selling prices also moved higher, said TSMC.

Utilization of the company's manufacturing facilities, which hit a ten-year low of 41 percent in the third quarter of the year, also improved in the fourth quarter to 50 percent and is expected to hit 60 percent in the first quarter of 2002. Average utilization across the entire year was 51 percent -- a drop of more than half from the previous year.

As shipments and utilization move higher, TSMC said it is planning to reduce overall capital expenditure by around 25 percent from 2001's US$2.2 billion.

Much of the investment planned for 2002 will go towards its number 12 line, which is capable of processing 12-inch (300-millimeter) wafers rather than the more common 8-inch (200-millimeter) wafers. Larger in size, 12-inch wafers are more profitable because they are capable of yielding more chips per wafer and the semiconductor industry is slowly moving towards standardizing around them.

TSMC's 12-inch capacity was just 2,000 wafers per month at the end of 2001, a fraction of its monthly capacity of 384,000 8-inch equivalent wafers, and plans call for this to climb to 10,000 by the end of the year.

For the current quarter, which ends on the last day of March, TSMC said it expects revenues to grow at a single-digit percentage rate and for the remainder of the year, TSMC said it expects things to continue getting better.

"Our business has been in a steady recovery since the third quarter of 2001," said the company in the statement. "We expect the recovery momentum to continue throughout 2002."

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