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UPDATE 1-Chipmaker TSMC cuts 2015 capex by over 20 pct on weak global demand
October 15, 2015 / 10:24 AM / 2 years ago

UPDATE 1-Chipmaker TSMC cuts 2015 capex by over 20 pct on weak global demand

* Cuts annual capex to four-year low

* Says continuing inventory adjustments to weigh on Q4 revenue

* Move comes after Intel slices capex (Adds context, quotes)

By J.R. Wu

TAIPEI, Oct 15 (Reuters) - Taiwan Semiconductor Manufacturing Co Ltd (TSMC) on Thursday slashed its annual capital expenditure by over a fifth to a four-year low as weak demand, particularly from China, prompted it to reschedule investment plans.

TSMC, the world’s largest contract chipmaker which counts Apple Inc as a client, also cut its 2015 outlook for the global semiconductor industry growth to zero from a previously forecast 4 percent, days after rival Intel Corp also cut its capex and revenue growth forecast, citing weakness in the global economy.

TSMC said its capex for this year would total about $8 billion, down from the $10.5 billion to $11 billion estimate it made in April. The capex forecast would be the lowest since 2011, TSMC said.

“This year’s $8 billion is kind of low, but next year is expected to be higher,” Chief Financial Officer Lora Ho told an earnings briefing, adding that it was too soon to give estimates for 2016.

Ho said TSMC had lowered its estimate partly due to the sluggish demand outlook from China, where the economy is growing at its slowest pace in nearly a quarter of a century, and not because of a loss in client orders.

Cost savings, and forex-related gains, also helped the company reduce its capex, she added.

China’s smartphone market, the world’s largest, shrank in early 2015 for the first time in six years.

TSMC, which posted a 5.1 percent quarter-on-quarter drop in third quarter net profit, said it expects revenue for the fourth quarter to range between T$201 billion ($6.3 billion) and T$204 billion, lower than the previous three-month period.

Inventory reduction will continue to weigh on revenue growth in the fourth quarter, said Mark Liu, TSMC’s co-chief executive officer. ($1 = 32.0970 Taiwan dollars) (Editing by Miral Fahmy)

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