TAIPEI — Taiwan Semiconductor Manufacturing Co., parent of WaferTech in Camas, is cutting its equipment budget as much as 27 percent as slowing demand for chips triggered the company’s first profit decline in three years.
Capital expenditure will be $8 billion for the year, Chief Financial Officer Lora Ho said Thursday, compared with a previous forecast for as much as $11 billion. Net income fell 1.3 percent to $2.3 billion in the third quarter.
TSMC’s second cut in spending for plants and machinery this year comes after Intel Corp. this week lowered its own outlook for capital expenditures and said a slowdown in server demand could threaten sales of its semiconductors. While TSMC gets some chip orders to supply Apple Inc.’s latest iPhone, those for other smartphones and personal computers are tepid.
“Due to a weaker global economy, a stronger U.S. dollar environment and a volatile financial market, the electronic device market has been negatively impacted, resulting in a lack of growth,” co-Chief Executive Officer Mark Liu said. “We see the unexpected slowdown of the economy in China since Q1, resulting in a continued sluggish smartphone demand economy.”
TSMC sees zero growth in the global semiconductor industry this year after previously expecting a 3 percent increase, Liu said. Global market revenue for smartphones will climb 10 percent this year while that for PCs will drop 6 percent, he said. TSMC’s full-year revenue growth will reach 10 percent, he said.
In July, TSMC estimated its annual capital spending at $10.5 billion to $11 billion, saying the figure may be adjusted in the future. Spending for the year through September was $5.5 billion, it said Thursday.
Ho cited efficiency gains, adjustments in capital deployment and changes to foreign-exchange rates for lowering the spending plan.
“TSMC is facing a combination of weaker-than-expected demand for PCs and smartphones, record-high inventory and a lower share of iPhone chip orders compared to a year ago,” Warren Lau, a Hong Kong-based analyst at Maybank Kim Eng Securities, said before the earnings release.
Shares have declined 0.7 percent this year in Taiwan, compared with a 7.6 percent drop for the benchmark index. A continuing slowdown in China, the world’s biggest smartphone market, prompted IDC in August to cut its forecast for global handset shipments.
