SHANGHAI Taiwan Semiconductor Manufacturing Co. said sales dropped and profit plummetted in the first quarter as it absorbed the lingering effects of an inventory correction.
Sales decreased 16.6 percent from a year ago, to $1.96 billion, while net income sunk 42.2 percent to $570 million. Diluted earnings per share of 11 cents per American Depository Receipt represented a 42.3 percent drop from a year ago.
On a sequential basis, first quarter sales decreased 13.4 percent and profits slid 32.5 percent. The company said the usually slow first quarter seasonality took its toll, but it expects things to improve.
"A majority of our customers' excess inventory has been worked through in the first quarter and the recovery of our business is already in place," said Lora Ho, TSMC's chief financial officer. "Relative to the first quarter, the communication and consumer segments will rebound quite well while the computer segment will grow at a lower pace."
The foundry said advanced process technologies (0.13-micron and below) accounted for 49 percent of wafer revenues with 90-nanometer process technology totalling 22 percent and 65-nm about 1 percent.
Its gross margin of 37.9 percent came in at about the mid point of guidance, while operating margin of 27.5 percent was near the high end of guidance. Net margin decreased 8.2 percentage points to 29 percent from the previous quarter.
For the second quarter, TSMC guided revenue up to be between $2.21 billion and $2.27 billion. Gross profit margin will increase to between 42 percent and 44 percent and operating profit margin is expected to be between 32 percent and 34 percent.