Thanks to a 19.8 percent increase in wafer shipments, Hsin-Chu, Taiwan-based semiconductor foundry Taiwan Semiconductor Manufacturing Co. (TSMC) reported today that revenue for its Q3 ended September 30 reached $2.1 billion (69.3 billion Taiwanese dollars), up 18.4 percent sequentially, and less than 1 percent lower than Q3 2004 revenue.

Gross margin for Q3 jumped 4.4 percent to 44.1 percent, due to higher levels of capacity utilization and more favorable exchange rates. 0

TSMC''s Q3 net income was $728.3 million (24.5 billion NT), 33.3 percent sequentially higher than Q2, but 12.3 percent lower than Q3 2004.

Fully diluted earnings per share were 3 cents (0.99 NT) per share, 12.2 percent lower than EPS in Q3 2004.
Revenues from communication and consumer applications increased in Q3 due to stronger seasonal demand and introduction of new products. Due to weaknesses in demand experienced in the PC graphics sector, revenues from computer applications declined.

IDMs accounted for 29 percent of wafer sales during the quarter, up from 26 percent in Q2.
Geographically, North America accounted for 75 percent of wafer sales, down from 77 percent in Q2. Meanwhile, sales from Asia Pacific increased to 11 percent of wafer sales from 9 percent previously.

Some product mix factors positively contributed to the blended average price, but the general price declines led to a 4.9 percent sequential decline in ASP.

Overall capacity utilization improved by 11 percentage points to 96 percent in Q3, reflecting stronger demand from customers across the board.

Total TSMC managed capacity in Q3 was 1.550 million 8-inch equivalent wafers, 6.8 percenthigher than the 1.451 million wafers in Q2.

TSMC managed capacity in Q4 will increases to 1.629 million wafers, representing a 5.1 percent sequential growth. The newly added capacity in Q4 will be mainly for the continuing ramp up of advanced capacities in Fab 12 and Fab 14.

Overall installed capacity for the year is expected to reach 5.96 million 8-inch equivalent wafers, 24 percent higher than Q3 2004.

"Due primarily to continual demand recovery from our customers, our third quarter business had improved better than we guided previously," said Lora Ho, VP and CFO of TSMC, in a statement.

The company expects "a healthy growth for the coming quarter," according to Ho, with revenues to be between $2.3 billion (77 billion NT) and $2.3 billion (79 billion NT). The overall utilization rate is expected to be about 100 percent with gross profit margin to reach between 47 and 49 percent, she concluded.