TSMC Sales Forecast Tops Estimates After Record Earnings

  • New iPhone 7 models released last month, stoking demand
  • Company sees capital spending ‘slightly above’ $9.5 billion

Taiwan Semiconductor Manufacturing Co. posted record profit and forecast sales above analyst estimates as demand for Apple Inc.’s new iPhones fuels contract production orders for processor chips.

Revenue will be NT$255 billion ($8 billion) to NT$258 billion in the three months ending December, the Hsinchu, Taiwan-based company said Thursday. That compares to analyst projections for NT$243.4 billion. Net income for the third quarter rose to NT$96.8 billion.

TSMC has been able to count on demand for Apple’s new iPhone 7 models to fuel sales of the A10 processor it makes, helping it weather a slowdown in the global smartphone market as it invests in more advanced production technology. Apple, the chipmaker’s biggest customer, probably gained an additional boost by problems at rival Samsung Electronics Co., which recalled its Note 7 device before deciding to scrap it.

“Its fourth quarter will look good because the Apple demand will be there for a while,” said Roger Sheng, an analyst at Gartner. “The first quarter of 2017 could be difficult for TSMC because shipment of 10 nanometer chips are expected to grow from the second quarter."

Apple may boost fourth-quarter iPhone shipments by as much as 3 million units on the Note 7 problems, according to Fubon Research.

Shares of TSMC fell 0.5 percent to NT$188.50 in Taipei before the earnings were announced.

TSMC said capital spending this year will be slightly above $9.5 billion.

Sales for the quarter were NT$260.4 billion, the company said. Gross margin, a key metric that assesses revenue less the cost of goods sold including depreciation, was 50.7 percent in the quarter, missing analyst projections for 51.5 percent. In the fourth-quarter, margin is projected to rise to as much as 52.5 percent.

— With assistance by Yuan Gao

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