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TSMC reports Q1 profit drop, promises brighter outlook

updated 03:20 pm EDT, Thu April 26, 2012

TSMC to fire up 20nm chip line by year's end

Taiwan Semiconductor Manufacturing Co. (TSMC), which supplies many large electronics makers with computer chips and components, has reported that its first quarter net profit fell by 7.7 percent compared to last year. The revenue for the quarter was slightly higher than expected, however. It has also said it expects to see profits grow later on in the year thanks to an improved economy and chip orders that are greater than expectations.

The foundry makes mobile device chips on-contract for companies who include NVIDIA, Qualcomm, and Texas Instruments. The slight drop is a sign of improvement after even weaker third and fourth quarters of 2011, when the company saw profits drop by 35 and 22 percent, respectively, due to the poor economy.

TSMC CEO Morris Chang expects growth to start in the third quarter.

A new 28-nanometer chip manufacturing line is expected to become more profitable as sales are expected to account for more than 20 percent of the company's revenue by the fourth quarter. During this past quarter, they only made up about five percent of revenues. Chang said the foundry can catch up to demand by the fourth quarter.

A 20nm process is also planned to start rolling out chips by year's end, which should increase profits but also raising equipment costs. These will be reduced over time, however, leading to higher profits. [via PCWorld]



By Electronista Staff
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