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Taiwan Semiconductor Manufacturing Co., the world's largest contract chip manufacturer, reported an 18 percent jump in first quarter profit as increased global sales of smartphones and tablet computers boosted demand for sophisticated processors.
The company said in a statement Thursday that January-March profit totaled NT$39.6 billion ($1.3 billion) on revenue of NT$132 billion.
It said more than half of its shipments were application processors and other chips for use in mobile devices. Growth in this area more than made up for stagnant sales of chips used in computers and other consumer electronics.
TSMC said it expects revenue to grow to between NT$154-156 billion in the second quarter.
Chairman and CEO Morris Chang said revenue growth for 2013 could exceed 10 percent, up from 7 percent growth predicted earlier, partly because wafer production using new cutting-edge technology is set to grow.
He said trial production using the advanced 20 nanometer technology began in the first quarter, while the company plans to advance further with 16 nanometer technology in a year from now.
The company's move into the 20 and 16 nanometer technologies, which allow for production of smaller chips that run faster at lower power, is being propelled by more intense competition in the industry.
TSMC is planning a record $9 billion of capital investment in 2013 to fend off competition, mainly from South Korea's Samsung Electronics Co. as well as Intel Corp., which has been speeding up its expansion into contract manufacturing following slow PC chip sales.
News reports say TSMC has been working with Apple Inc. to supply the Cupertino, Calif.-based company with the new processor to power the next generation of iPhones and iPads. Apple currently gets such processors from Samsung.
Samsung is Apple's main competitor in smartphones and tablet computers, as well as its principal supplier of processors. This has fueled speculation that Apple is looking for a new processor source.