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Top Taiwan chip maker to generate loss in Q1

TAIWAN Semiconductor Manufacturing Co, the world's largest custom-chip maker, will post a surprise quarterly loss, its first since 1990, as customers including Texas Instruments Inc reduce orders.

The company will report a net loss this quarter amid a 30-percent decline in sales for the global chip market this year, Chief Executive Rick Tsai said at an investors' conference yesterday in Taipei. Contract manufacturers of semiconductors will under-perform the broader industry, he said.

The slump in orders is likely to deepen as recessions take hold in the United States, Europe and Japan, driving down spending on electronics. The company, a benchmark for the technology industry because it makes chips for everything from mobile phones to flat- screen televisions, will post an operating loss this quarter that exceeds analyst estimates.

"The first quarter is set to be much worse than anyone expected," said Eric Chen, who rates the stock "hold" at BNP Paribas in Taipei. "It's compounded by the lack of visibility in the second quarter."

Fourth-quarter net income dropped 64 percent to NT$12.4 billion (US$370 million), or 48 NT cents a share, from NT$34.5 billion, or NT$1.29, a year earlier, the chip maker said in a statement. The Hsinchu, Taiwan-based company was expected to post profit of NT$11.4 billion, based on the median of 11 analyst estimates compiled by Bloomberg News.

"The first quarter may be the bottom, but we cannot be sure of it," Tsai said.

The firm was set to post a first-quarter profit of NT$2.2 billion, according to the median of 10 analyst estimates.

Revenue for the global chip industry fell 25 percent in the fourth quarter from the third, with made-to-order chip foundries likely to under-perform a 30-percent drop in the market this year, Tsai said.

Retail sales in the US fell more than double the amount expected last month.



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