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Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) 3Q Profit Margin Increases By 4.5 Percentage Points On Strong Demand

Boston, MA 10/16/2014 (wallstreetpr) – Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) delivered strong results for the third quarter driven by solid demand from smartphone sector. The company could easily turn the demand into a better price realization. As a result, its gross margin witnessed 200 basis points improvement from the previous year quarter thus lifting its profit margin by 4.5 percentage points on local currency basis in the same period under review.

The company has also supplied its chips to Apple Inc. (NASDAQ:AAPL)’s latest smartphone models, iPhone 6 and iPhone 6 Plus both directly and indirectly.

3Q Results

Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) reported net income of NT$76.34 billion for the third quarter representing 46.9% jump from NT$51.95 billion in the year-ago quarter. Its earnings also climbed 46.9% to NT$2.94 a share from NT$2.00 a share in the prior year quarter. Sequentially too, net income recorded 27.9% uptick.

Its revenue increased 28.6% to NT$209.05 billion from NT$162.58 billion in the previous year quarter. Sequentially also, it recorded a growth of 14.2%.

In US dollar terms, Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) generated revenue of $6.97 billion while net income was $2.54 billion or 49 cents a share for the current year’s third quarter. Revenue in terms of USD advanced 28.1%. Both earnings and revenue came in above the Wall Street analysts’ expectations of 48 cents a share and $6.92 billion respectively.

The strong revenue growth was attributed to direct orders from Apple that contributed approximately 6% of revenue, Reuters reported. Taiwan Semiconductor also received orders indirectly for Apple iPhone models through QUALCOMM, Inc. (NASDAQ:QCOM) and Broadcom Corporation (NASDAQ:BRCM) contributing close to 15% of revenue.

Other Metrics

Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM)’s gross margin improved to 50.5% on local currency basis from 48.5% in the same quarter last year. Its income from operation, as percentage revenue, increased to 40.4% on local currency basis from 36.7% driven by overall control over the expenses.

As a result of tight control over the expenditures, Taiwan Semiconductor Mfg. Co. Ltd. (ADR) (NYSE:TSM) could achieve increased net profit margin percentage over the last year quarter. Its third quarter net profit margin was 36.5% compared to 32.0% in the year-ago quarter.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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