TSMC posts record third quarter profit but forecasts weaker sales

Taiwan Semiconductor Manufacturing Co on Thursday said third quarter net profit rose 5.2 percent on-year to a record high, but the world's biggest contract chip maker warned of weaker sales in the coming three months. TSMC said net profit rose to Tw$51.95 billion ($1.77 billion) in the July-September period. Revenue also hit a record high of Tw$162.6 billion, up around 15 percent from a year earlier, driven by demand for high-performance chips from smartphone and tablet makers. However, it presented a sobering outlook for the fourth quarter, when revenue is expected to fall roughly 10 percent from the previous quarter to between Tw$144 billion and Tw$147 billion. "We expect our fourth quarter to be impacted by softer demand for certain high-end mobile devices and the inventory correction resulting from such softer demand," said chief financial officer Lora Ho. TSMC has said it enjoyed a surge in demand for its wafer technology since the first quarter as mobile makers ratchet up their smartphone lines amid fierce competition in the multibillion-dollar sector. In accordance with this, TSMC raised its capital expenditure estimate for 2013 to around $9.7 billion, from the previous forecast of $9 billion. US giant Apple struck a deal with TSMC in May in what analysts see as an attempt to reduce its reliance on arch-rival Samsung, the Wall Street Journal said in June. It said manufacturing of chips for Apple's mobile devices would start early next year.