Chipmaker TSMC reports Q2 profit up 24 percent

Revenue was also up 21.6 percent year over year

Taiwan Semiconductor Manufacturing Co. said its net profit in the second quarter grew 23.8 percent year over year, driven by demand for faster and power-efficient chips for mobile phones built with its new 28-nanometer manufacturing process.

The contract chipmaker's net profit for the quarter reached NT$51.8 billion (US$1.7 billion), an increase from NT$41.8 billion in the same period a year earlier, TSMC reported on Thursday.

Revenue was at a record NT$156 billion, a year-over-year increase of 21.6 percent and at the upper end of its forecast.

TSMC is a maker of many of the chips in today's smartphones and tablets, including processors from Qualcomm and Nvidia. The company has also reportedly signed a deal to start making chips for Apple next year. About a third of TSMC's revenues are projected to come from smartphones and tablets in 2013.

"Mobile products have been important in driving demand in recent years," said TSMC CEO Morris Chang in an earnings presentation. "We will continue to enjoy robust growth this year, as well as in the coming years."

TSMC is obtaining more of its revenue from its new 28-nanometer chip manufacturing technology. During the second quarter, 29 percent of TSMC's revenues came from its 28-nanometer chip manufacturing, a five percentage-point increase from the previous quarter.

At the same time, the company is also seeing major growth for smartphone chips at the lower end of the market, Chang said. Customers from China are another fast growing area, he added, noting that its business from the country during the first half of 2013 had doubled compared to a year earlier.

TSMC is preparing to deploy next-generation chip-making technology that will offer further gains in processing speed and power efficiency. Early in 2014, TSMC will start using its new 20-nanometer manufacturing processes to build chips in larger volumes. By early 2015, the company will move to its 16-nanometer process.

TSMC's 20-nanometer manufacturing process can provide 30 percent higher speeds over its current 28-nanometer technology. The company's 16-nanometer technology can provide a similar gain, of 20 percent, over the 20-nanometer process.

In this year's third quarter, TSMC projects the company will earn between NT$161 billion and NT$164 billion in revenue.

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