TSMC Registers Record High Revenues for 2016 with Slight Decline Expected for Q1 2017

16 Jan

Leading wafer foundry TSMC held its investor conference on January 12, 2017. At the conference, Chairman Morris Chang unveiled TSMC’s revenues for the fourth quarter of 2016 and net profits for the whole year. According to Chang, TSMC’s consolidated revenues in the fourth quarter of 2016 was NT$262.23 billion, up 0.7% sequentially, and net profits grew 3.6% sequentially to NT$100.2 billion. The company’s net profits for this quarter were the highest in history, boosting its EPS (Earnings per Share) to NT$3.86. With profits expected to grow in the fourth quarter, TSMC’s shares rose NT$2.5, equivalent to 1.37%, to close at NT$184.5 on the Taiwan Stock Exchange on January 12.

TSMC registered an increase of 28.8% in fourth-quarter revenues with 37.6% growth for net profits and EPS. Compared to the previous quarter, fourth-quarter revenues and net profits grew 0.7% and 3.6% respectively. Along with the fourth-quarter revenues, TSMC also announced the revenues for the whole 2016 which posted 12.4% year-on-year growth, totaling NT$947.94 billion. The company’s net profits also rose 9% on year, reaching a record high at NT$334.247 billion, with EPS arriving at NT$12.89.

As for share of sales in total wafer revenues in the fourth quarter of 2016, 16nm and 20nm accounted for a combined 33% while 28nm accounted for 24%. Overall, advanced technologies (28nm and below) contributed 57% of total wafer revenues in the fourth quarter. Breaking down by product types, sales generated from the communication sector took the largest share of total wafer revenues at 66%, followed by sales from the industrial/standard segment at 20%. Sales from the computer and consumer segments comprised 8% and 6% of total revenues, respectively.

In terms of revenues contributed by product segments in the fourth quarter of 2016, communications products and computers grew 11% and 7% on quarter respectively while industrial/standard products declined by 6% sequentially. Affected by the traditional low season and fewer working days, Chief Financial Officer of TSMC Lora Ho expects revenues for the first quarter of 2017 to drop by 8.9% to 10% sequentially, higher than investors’ 5% expectations. However, as market share in the 16nm segment increases and profits from 28nm remain steady, TSMC’s gross margin will continue to stay above 50% despite a revenue decline. Therefore, TSMC’s gross margin and operating profits will remain high in the first quarter of 2017.