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TSMC first-quarter profit almost doubles on chip demand but sees flat growth in second half

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·2 min read
FILE PHOTO: A logo of Taiwan Semiconductor Manufacturing Co (TSMC) is seen at its headquarters in Hsinchu
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TAIPEI (Reuters) - Taiwan Semiconductor Manufacturing Co Ltd's (TSMC) net profit almost doubled in the first quarter but it warned of flat revenue growth in the second half as weakening demand caused by the coronavirus offset strong sales for faster chips.

The world's largest contract chipmaker, whose clients include tech companies such as iPhone maker Apple Inc, said profit in the January-to-March period was T$116.987 billion ($3.89 billion), up 90.6% from a year earlier.

It was much higher than the T$105.83 billion average of 19 analyst estimates compiled by Refinitiv.

"Our second-half revenue is about flattish or may decline slightly," Chief Financial Officer Wendell Huang told a briefing on Thursday, citing what the company saw as a "temporary" impact on demand from the coronavirus, which TSMC expects to be stabilised by June.

Huang said the coronavirus was expected to hit demand for electronics, including smartphones, but it would be balanced by continued fifth generation (5G) mobile communication technology deployment and strong demand for faster chips.

TSMC expected second-quarter revenue of between $10.1 billion and $10.4 billion, up from $7.75 billion a year ago.

Buoyed by demand for advanced chips from clients investing in 5G technology and artificial intelligence, TSMC's revenue in the first quarter rose 45.2% to $10.31 billion, versus its forecast range of $10.2 billion to $10.3 billion.

The earnings growth may, however, only be a short reprieve as coronavirus-induced job losses and other economic pain hurt global demand for consumer electronics and major clients grapple with supply chain disruptions and factory shutdowns.

Gartner last week slashed its forecast for global semiconductor revenue in 2020 to a decline of 0.9% from its previous estimate of 12.5% growth.

Apple, a major TSMC client, rescinded its outlook for the first quarter of 2020 saying manufacturing in China had taken longer than expected to resume amid travel restrictions and an extended Lunar New Year break.

Shares in TSMC were down 0.4% before the results. They have fallen more than 13% this year.

($1 = 30.0890 Taiwan dollars)

(Reporting By Yimou Lee and Taipei newsroom; Editing by Himani Sarkar, Robert Birsel)