World's largest contract chip maker reports weak Q4

Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chip maker, said the deepening global economic recession hurt its fourth-quarter results.

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Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chip maker, said the deepening global economic recession hurt its fourth-quarter results and predicts worse times ahead.

It predicted its sales in the first quarter could be cut in half.

The company, which manufactures chips on behalf of its clients, said consolidated sales dropped 31 per cent to NT$64.56 billion (US$1.92 billion as of 31 December, 2008, the last day of the period reported), while net profit sank 64 per cent to NT$12.45 billion.

Demand for digital products in the fourth quarter was worse than expected and consumer demand remains weak, TSMC said.

The consequence for TSMC has been a "significant" reduction in demand.

Sales in the first quarter will likely fall to between NT$32 billion and NT$35 billion, TSMC said, well below the NT$87.48 billion in sales the company reported in the first quarter last year.

The last time TSMC's sales were near the range forecast was in 2001, when the global technology industry hit the skids after the dot-com bubble burst.

TSMC said its gross profit margin will fall to between 1 per cent and 5 per cent, compared to 31.3 per cent in the fourth quarter.

TSMC's quarterly earnings reports are watched carefully for signs of rising or falling demand because the company manufactures such a wide variety of chips for so many end products.

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