Taiwan Semiconductor Manufacturing Company (TSMC) expects to post consolidated revenues of between US$7.55 billion and US$7.65 billion in the second quarter of 2019, up 6.4-7.8% sequentially but down 2.6-3.9% on year. Gross margin and operating margin will also rebound to 43-45% and 31-33%, respectively.
"While the economic factor and mobile product seasonality are still lingering as we move into second quarter, we believe we may have passed the bottom of the cycle of our business as we are seeing demand stabilizing," said company CFO Lora Ho.
"In the first quarter, our business was impacted by the overall global economic condition which dampened the end market demand; customer inventory management to digest excess inventory in the semiconductor supply chain; and high-end mobile product seasonality," Ho continued. "Meanwhile, the net effect from the photoresist defect material incident also impacted our first quarter revenue by about 3.5%."
TSMC announced net profits fell 38.6% sequentially and 31.6% on year to NT$61.39 billion (US$1.99 billion) in the first quarter of 2019. EPS for the quarter came to NT$2.37.
TSMC reported consolidated revenues of NT$218.7 billion for the first quarter, down 24.5% on quarter and 11.8% from the same period a year earlier. In US dollars, first-quarter 2019 revenues arrived at US$7.1 billion, which decreased 24.5% from the previous quarter and 16.1% year-over-year.
TSMC saw its gross margin slid to 41.3% from 47.7% in the prior quarter and 50.3% in the first quarter of 2018, while operating margin slipped 7.6pp sequentially and 9.6pp on year to 29.4%. Revenue and margin results all came within the foundry's guidance that was revised once due to the use of substandard photoresist chemicals that disrupted its 12/16nm chip production at Fab 14B earlier this year.
TSMC said previously that the incident would reduce its first-quarter 2019 revenues by about US$550 million, gross margin by 2.6pp, operating margin by 3.2pp, and EPS by NT$0.42. The foundry estimated previously revenues at between US$7.3 billion and US$7.4 billion, and gross margin and operating margin at 43-45% and 31-33%, respectively.
TSMC also disclosed that 7nm chip shipments accounted for 22% of total wafer revenues in the first quarter of 2019. Advanced technologies, defined as 16nm and more advanced technologies, accounted for 42% of total wafer revenues during the quarter.
