TSMC October Chip Sales Hit All-Time High

Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chip maker, Friday reported record high monthly chip sales for October, and reiterated its fourth-quarter guidance.

The figures reaffirmed that the chip sector continues to hum along despite problems in the U.S. housing market. TSMC is considered a bellwether for the tech industry because of the wide range of chips it manufactures, which end up in products including Xbox 360s, iPhones, PCs and automobiles.

The company said consolidated sales in October rose 20.6 percent year-over-year to NT$32.6 billion (US$1.01 billion), beating its previous record of NT$30.02 billion from August.

Its consolidated sales from January through October hit NT$261.4 billion, down 3 percent compared to the same time last year.

Analysts have been carefully watching TSMC for signs of weakness because despite positive statements about the chip industry going forward, TSMC said it will significantly reduce its spending on new production line equipment next year. Companies normally reduce such spending when they believe a glut may be on the horizon.

The company has predicted that its consolidated sales for the fourth quarter will reach between NT$92 billion to NT$94 billion, up from NT$88.96 billion in the third quarter.

"TSMC reported yet another historical high monthly revenue which exceeded the high-end of our expectation and was substantially above consensus estimates ... we expect TSMC to hit the high-end of its fourth quarter revenue guidance," said Warren Lau, chip industry analyst at Macquarie Securities, in a report. He noted that TSMC's sales figure was more than three times higher than that of its biggest rival, United Microelectronics Corp. (UMC), also of Taiwan.

UMC earlier this week reported its October sales increased 11.9 percent year-on-year to NT$10.1 billion, while its January through October sales rose 2.6 percent to 89.3 billion.