Taiwan's TSMC sees signs of chip rebound

By Staff and reports

TAIPEI, Taiwan (CNN) -- Despite a sharp cut in its 2001 profit forecast, Taiwan Semiconductor Manufacturing (TSMC) sees recovery in demand across its product lines.

The world's leading foundry for made-to-order computer chips reported a better than expected surge in third-quarter profits last week.

It told the Financial Times that this result may reflect a greater rebound in the beleaguered chip sector.

"Our business may be the leading indicator for how the semiconductor industry is doing," TSMC vice president Hu Genda told the business daily.

Standing firm

The chipmaker on Thursday slashed its 2001 profit forecast from $744 million to $310 million.

Citing a poor macroeconomic outlook, Goldman Sachs also cut its 2001 earnings per share forecast for TSMC.

But TSMC's Hu stood firm by last week's upward revision of its third quarter forecast, despite fears of economic aftershocks from the September 11 terror attacks in the U.S.

"The (attacks) put some clouds ahead of us and like everybody else we are very cautious about the future, but we still remain very optimistic," he said.

The foundry last week said it anticipated its operating income for the current quarter to be five times the $8.2 million it achieved in the previous quarter, offering a rare ray of light in the IT gloom.

TSMC said Thursday's 2001 revision was done to comply with local rules and was a far less useful indicator than the firm's quarterly financial statements.

Hu added that TSMC was past the worst of the downturn, and that the demand for PC chips appeared to be recovering strongly.

Chip firms throughout Asia have been hit hard from the fallout of the terror attacks, with share prices and forecasts falling on fears that U.S. consumers won't buy.

With more restrictions on travel in the aftermath of the plane attacks, chipmakers would also find it difficult to ship products.

Analysts have said TSMC's optimistic outlook does not reflect a general upswing in the battered chip sector.

Number-two chip foundry United Microelectronics (UMC) and number-three Chartered Semiconductor Manufacturing have not seen much of the recovery.