Chip maker TSMC reports record profits for 2004

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chip maker, reported on Thursday that its net income for 2004 rose 95 percent to NT$92.3 billion (US$2.9 billion), setting a new record for the company.

“It was a very good year for TSMC,” said Lora Ho, TSMC’s vice president and chief financial officer, speaking to investors at a conference in Taipei. Ho’s remarks were carried live by a Webcast of the conference.

TSMC earned revenue of NT$256 billion for the year ended Dec. 31, 2004, an increase of 27 percent compared to 2003 and another record for the company, it said in a statement.

The company’s fourth-quarter results declined somewhat from the third quarter, but the figures still showed a healthy gain over the same period last year.

Fourth-quarter revenue reached NT$63.9 billion, a decline of 8 percent compared with its third-quarter results, TSMC said. Fourth-quarter net income was NT$22.2 billion, a decline of 21 percent from the previous quarter. Compared with the same period last year, TSMC’s fourth-quarter net income and revenue rose 11 percent and 39 percent, respectively, it said.

Ho attributed the decline in revenue between the third and fourth quarters to customers selling off their existing product inventories.

Looking ahead, TSMC plans to spend between US$2.5 billion and US$2.7 billion on capital expenditures (capex), said Morris Chang, the company’s chairman and CEO. TSMC spent US$2.4 billion on capex in 2004, he said.

“At US$2.6 billion, our capex will be 32 percent of our anticipated revenue (for 2005), roughly,” Chang said, adding that amount would set a record for the company. Previously, the most that TSMC has spent on capex was US$2.5 billion during 2000, he said.

Chang revised downwards an earlier projection that the worldwide semiconductor market would be flat during 2005, saying he now expects to see the worldwide semiconductor market decline by 3 percent during the first quarter.