SAN FRANCISCO—Foundry giant Taiwan Semiconductor Manufacturing Co. (TSMC) Thursday (Oct. 27) reported a third quarter sales decline and said it expects a further decline in the fourth quarter. But TSMC said it expects its capacity utilization to improve slightly in the fourth quarter.
TSMC (Hsinchu, Taiwan) reported third quarter sales of NT$106.48 billion (about $3.54 billion), down 3.6 percent from the previous quarter and down 5.1 percent year-to-year. The company reported a net income of NT$30.4 billion (about $1.01 billion), down 35 percent from the previous quarter and 16 percent year-to-year.
Twenty-seven percent of TSMC's revenue for the quarter came from combined 28- and 40-nm technologies, TSMC said, while another 27 percent came from 65-nm technology.
TSMC said it shipped about 3.2 million 8-inch equivalent wafers in the third quarter, down 3 percent from the second quarter. Totally capacity grew to about 3.42 million 8-inch equivalent wafers in the quarter, TSMC said, putting the company's capacity utilization for the quarter in the neighborhood of 93 percent.
"The outlook of the global economic condition continues to weaken, which has impacted the demand for our wafers in the fourth quarter of 2011," said Lora Ho, TSMC senior vice president and chief financial officer, in a statement.
Ho said TSMC expects revenue to decline to between NT$103 billion and NT$105 billion ($3.43 billion to $3.49 billion) in the fourth quarter.
In a conference call with analysts following the quarterly report, Ho said TSMC expects its capacity utilization to improve slightly in the fourth quarter.
United Micro Electronics Corp., TSMC's smaller rival, said Wednesday it expects its capacity utilization to decrease to below 70 percent in the fourth quarter. Morris Chang, TSMC's chairman and CEO, said TSMC reduced some of its own inventory in the third quarter, which held down utilization.
"After your inventory reduction has been completed, then you have to make it up slowly," Chang said. "Therefore your utilization comes up."