Taiwan Semiconductor Manufacturing

(TSM) - Get Report

, the world's largest contract microchip maker, reported strong fourth-quarter results, but warned of a sales slump in early 2001 amid slowing demand in the U.S. market.

The Taipei-based company said fourth-quarter earnings grew 158% to 21.47 billion new Taiwan dollars ($665.1 million), compared with 8.31 billion new Taiwan dollars a year ago. Earnings per share for the quarter rose to 1.84 new Taiwan dollars from 0.84. Based on the firm's American Depositary Receipts, or ADRs, earnings were 29 cents per share, up from 13 cents per share in the year-ago period. Analysts polled by

First Call/Thomson Financial

expected fourth-quarter earnings of 30 cents a share.

Fourth-quarter revenue more than doubled to 53.82 billion new Taiwan dollars from 23.69 billion in the year-ago period.

During its conference call with analysts, Taiwan Semiconductor warned it expects revenue to slump in the first three months of 2001, bottoming out around March or April, but with a rebound likely during the third quarter. As a result, the company said it sees double-digit revenue growth for 2001, and an even faster increase in 2002.

The company also said it expects its closely watched capacity utilization rate, a measure of actual versus maximum rated output, to fall to 70% after hovering above 100% all of last year. Capital expenditures for 2001 will be $2.7 billion, down from $3.8 billion last year, the company said.

The company's ADRs closed at $21.99 on the

New York Stock Exchange

Monday.