TSMC expects revenues to grow by 20% in 2003

Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest made-to-order foundry, expects revenues to grow by 20% in 2003, thanks to rising orders at its advanced technology nodes, according to chairman Morris Chang.TSMC may see a capacity shortage at its advanced technology nodes in the second half, but the company will be more careful about expanding capacity in the near term as it focuses more on boosting shareholder return, Chang told the Chinese-language Commercial Times in an interview."TSMC will expand capacity when it is confident about the source of its orders," Chang said, confirming that the company’s capacity utilization at the advanced process nodes is nearing 100%.The company will adjust its capital expenditures with the goal of increasing its return on equity (ROE), Chang said. His statement reflects the company’s decision to balance its capacity requirements with the company’s near-term profitability.After seeing a sharp drop in the company’s ROE over the past few years, Chang has recently been reiterating the importance of ROE as a benchmark of the company’s management strategy.Prior to 2000, TSMC reported an ROE of above 20%, but the ratio fell to 5% in 2001, mainly due to high depreciation costs associated with the record high capital expenditures of US$2.5 billion in 2001. TSMC registered a ROE of 8% in 2002.Chang said his forecast of 20% sales growth for his company is better than his forecast of 8% growth for the global semiconductor market. TSMC expects its revenues to grow at an average rate of 20% over the next seven years, he said.TSMC will have better visibility for its third-quarter orders in mid-July, he said. Affecting the orders in the second quarter, however, is worse-than-expected handset demand in China and the traditional second-quarter weakness in the PC sector, he said. But the third-quarter outlook is "not bad," he said, though visibility continues to be low.Source: DigiTimes