Taiwan Semiconductor Manufacturing Company (TSMC) has reported first-quarter 2012 consolidated revenues of NT$105.51 billion (US$3.6 billion), a 0.1% increase on year.

The figure exceeded expectations. The firm reported gross margin was 47.7% in the first quarter, up 3% on quarter, but down 1.3% on year. Net profits were NT$33.47 billion, up 6% on quarter but down 7.7% on year. EPS for the first quarter was NT$1.29.

The firm optimistically predicts second-quarter 2012 revenues will grow by 19-21% due to strong demand for 28nm. Sales from 28nm wafers is likely to account over 20% of total revenues by the end of the year.

TSMC provided guidance for the second quarter. Due to booming demand from clients, second-quarter 2012 revenues are likely to be in the range of NT$126-128 billion, using an exchange rate of US$1 to NT$29.58. Gross margins for the second quarter are likely to fall between 47-49%. Operating profit ratio is forecast to be between 34.5-36.5%, said TSMC.

TSMC spokesperson Lora Ho said electricity price hikes will be one of the factors affecting gross margins in the second quarter. Taiwan Power Company, a state-owned firm, plans to increase electricity prices in the middle of May which will cause TSMC's electricity bills to increase by 38%. This is likely to decrease gross margins for second-half 2012 by 1pp. Other factors such as exchange rate fluctuations, production costs, and capacity utilization rates will also affect gross margins. Fab 15 began production in April, and hence will experience higher production costs during this initial stage.

To meet strong demand, TSMC has been aggressive in increasing 28nm capacity. According to the firm, first-quarter 2012 capex was US$1.635 billion. Sales of 28nm increased from 2% to 5% in the first quarter and will reach beyond 20% at the end of the year, said TSMC. Sales from 40nm accounted for 32% of total revenues while sales from 65nm accounted for 26% in first-quarter 2012.

Fab 15 will begin production of 28nm products by the end of 2012. Monthly capacity is expected to be 50,000 units.

By: DocMemory
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