Magazine

No. 11: TSMC


INDUSTRY

Semiconductors

REVENUES

$8.0 billion

PROFITS

$2.9 billion

SAM YEH/AFP/

GETTY IMAGES

In the chip industry, notorious for its ups and downs, there are some clear advantages to being No. 1 during tough times. Taiwan Semiconductor Manufacturing Co. (TSMC) is the world's leading chip foundry, producing semiconductors for clients rather than selling under its own brand. And the Hsinchu company has weathered the latest downturn better than its Asian rivals. TSMC's profits, $2.9 billion last year, will probably fall about 9% in 2005. Not great. But profits at Taiwanese rival United Microelectronics Corp. are likely to plunge 70%, analysts say.

TSMC has also opened its first chip fab in China. At the same time, Shanghai-based Semiconductor Manufacturing International Corp. stunned investors in September by slashing estimates on profit margins by more than a third, to about 9%.

TSMC boasts a strong base of customers, including U.S. chip powers like Freescale Semiconductor, Nvidia, and Broadcom (). TSMC is also benefiting from brisk demand for semiconductors in wireless LAN gear and cellular phones. ``The amount of silicon incorporated into handsets continues to increase,'' says Chief Executive Rick Tsai, who took over the job from retiring Chairman Morris Chang in July. ``It seems everything they can think of, they want to put in the handset.'' With that kind of demand, expect TSMC to post more good results.


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