TSMC Revises Down Q4 View on Economic Woes

Taiwan Semiconductor Manufacturing Co. (TSMC) revised down its fourth quarter sales guidance as customers slashed chip orders amid "continuing weakness in global economic conditions," the company said in a statement.

The world's largest contract chip maker now expects fourth quarter sales to reach between NT$63 billion and NT$65 billion (US$1.89 billion to US$1.95 billion), down from its previous forecast of NT$69 billion to NT$71 billion.

The NT$6 billion (US$180.3 million) reduction is significant because it shows business conditions in the chip industry continue to worsen. TSMC is considered a bellwether for the global IT industry because it manufactures chips for such a wide variety of gadgets. Chip companies from Advanced Micro Devices (AMD) in graphics and Qualcomm and Texas Instruments in mobile phones farm out chip production to TSMC.

TSMC's original fourth quarter guidance already showed a significant drop in sales compared to the same time last year, NT$93.86 billion, and a sharp drop off in business compared to the third quarter of this year, when its sales were NT$92.98 billion.

TSMC also cut its fourth quarter gross profit margin estimate to between 30 percent and 32 percent, down 4 percentage points from previous guidance.

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