TSMC's Chang: Japanese Customers Do Not Slash Contract Orders

Taipei, March 22, 2011 (CENS)--Despite the March 11 massive earthquake and the ensuing devastating tsunami disturbing Japan's supply chains of electronics materials, Taiwan Semiconductor Manufacturing Co. (TSMC) Chairman and Chief Executive Morris Chang said the company's Japanese customers have yet to slash contract orders.

Chang made the statement in an interview yesterday with the Wall Street Journal. The world's No.1 silicon foundry has depended on Japanese contracts for 5-10% of revenue.

Also, Chang estimated Tokyo Electron Ltd. (TEL) of Japan would resume production soon. TSMC has placed orders with TEL for chip-making equipment needed for production expansion. The equipment supplier has suspended production after the quake although the ensuing tsunami did not hit it.

Chang said his company, to ensure uninterrupted production, was seeking other supply sources of raw silicon wafers after the devastating quake, while also asking existing suppliers for more deliveries.

The top TSMC executive said that his company is optimistic about the market for wireless and mobile chips and will boost production capacity in light of aggressive accesses of its customers including AMD, Nvidia and Qualcomm to the persistently growing market.

Nevertheless, Chang also pointed out that the foundry market has been growing crowded. Major chipmakers, he said, spent billions of US dollars over the past year on capacity expansions in light of brisk demands for smartphones and tablet PCs.

Regardless of the disruption to supply chains, Chang said his company maintains the goal of scoring 20% more revenue and making 10% more pre-tax earnings this year than last year, as well as bringing average return no equity beyond the 20% benchmark in 2015. Based on the goal, the company is estimated to rake in revenue of US$15.9 billion throughout this year, up from last year's US$13.3 billion.