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Taiwan's TSMC Q4 earnings/sales up on better than expected demand
Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) said consolidated net profit in the fourth quarter of 2007 rose 13.5 pct from the third quarter and sales grew 5.5 pct thanks to stronger-than-expected demand across all major product segments, including communication, computer and consumer.

The world's leading wafer foundry said consolidated net profit rose to 34.49 bln twd in the fourth quarter from 30.37 bln the quarter before as sales increased to 93.86 bln twd from 88.96 bln.

For full-year 2007, consolidated net profit fell to 109.18 bln twd from 127.01 bln in 2006 as gross margin shrank to 44.1 pct from 49.1 pct. Sales rose to 322.63 bln from 317.41 bln.

The company delivered 8.01 mln wafers in 2007 against 7.22 mln in 2006.

Fourth quarter shipments increased to 2.36 mln eight-inch-equivalent wafers from 2.23 mln in the third quarter.

Gross margin for the fourth quarter was 47.8 pct, up 2 percentage points from the previous quarter.

The improvement reflected a higher level of capacity utilization and continued cost cutting, though these efforts were partly offset by US dollar depreciation, chief financial officer Lora Ho told a quarterly briefing for investors.

It said the full-year goss margin declined 5 percentage points from the 2006 level, mostly due to lower overall utilization and price declines.

The chipmaker expects consolidated sales of 87-89 bln twd for the first quarter to March, compared with 93.86 bln twd in the fourth quarter of 2007, Ho said.

Gross margin is seen falling to 42-44 pct in the current quarter from 47.8 pct in the fourth, while the operating margin is likely to decline to 32-34 pct from 39.2.

Ho said both projections take account of the possible impact of new accounting rules that require bonus payments to employees to be expensed.

Employee bonuses are expected to shrink gross margin by 2.5 percentage points and erode operating margin by 4.7 points in the first quarter.

For 2008 as a whole, bonuses are likely to erode gross margin by 2.4-2.6 percentage points and reduce operating margin by 4.6-4.8 points.

TSMC said it sees capital expenditure of 1.8 bln usd this year, without specifying whether that is for the consolidated or parent level.

Its consolidated capex was 2.56 bln usd in 2007, while parent-level capex was 2.48 bln usd.

Chief executive Rick Tsai said the semiconductor industry should grow by "mid-single digits" in 2008 and the foundry sector is likely to outperform.

"TSMC will grow well," he added. "We have confidence that this foundry model will go on working for many years."

He said the main drivers of sales in the current quarter are the handset and personal computer segments. The consumer segment may be weaker because of the usual seasonal factors, he added.

In today's trade, TSMC shares closed up 1.70 twd or 2.94 pct at 59.50.

(1 usd = 32.20 twd)
http://www.tradingmarkets.com/.site/news/Stock%20News/1048051/