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Taiwan Semiconductor Sees Pickup in Demand

The foundry expects its wafer shipments and utilization rate to surpass the guidance issued in October.

Leading foundry

Taiwan Semiconductor

(TSM) - Get Taiwan Semiconductor Manufacturing Co. Ltd. Report

issued some encouraging news on the December quarter Friday, saying it had seen a recent pickup in demand for PCs and communication gadgets for the Christmas season. As a result, it expects its wafer shipments and utilization rate to surpass the bleak guidance issued in an October earnings call.

On a day many chip stocks were in the red, investors bid up TSMC by 20 cents, or 2.3%, to $9.

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According to TSMC's revised forecast, fourth-quarter wafer shipments should be about equal to the third quarter's shipments. Previously TSMC had said wafer shipments were likely to see a sequential decline by a percent in the low teens.

The company also said it expects to use about 60% of its manufacturing capacity in the fourth quarter now under way. In October, it predicted its utilization rate would shrink to the low to mid-50s, due to a combination of reduced wafer output and 6% sequential growth in capacity.

While the new utilization forecast represents an improvement in outlook, it's worth noting that it still reflects a sizeable drop-off from the third quarter, when the foundry used 79% of capacity.

TSMC didn't make any change to its revenue guidance Friday. Last month it predicted revenue will fall in both its fourth quarter and the first quarter of 2003, with growth likely to resume in the second quarter of next year. The company expects to remain profitable for the period.

In its most recently reported October quarter, TSMC reported a 10% sequential slide in sales.