TSMC rises after upbeat forecast by Applied Materials analysts

The China Post news staff

Stock of Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chip-maker, surged yesterday after equipment maker Applied Materials gave a sanguine outlook for the second quarter. TSMC at one point touched NT$81.1, translating into market capitalization of over NT$2 trillion. It closed at NT$80, up NT$1.5 or 1.91 percent from the previous day. According to Applied Materials, its second-quarter sales are expected to fall between US$2.3 billion and US$2.52 billion, a rise of 5 to 15 percent quarter-on-quarter. Earnings per share are expected to hit US$0.2 to US$0.28. The company surged in post-market trading to US$14.08, up 6.6 percent. Most analysts attributed Applied Materials’ better sales to increased expenditure by semiconductor manufacturers, such as TSMC and Samsung. TSMC itself gave a positive outlook for its operations.

The company has predicted first-quarter sales to fall between NT$103 billion and NT$105 billion, on upward inventory adjustments by clients. Second quarter sales are expected to rise further. Analysts are also banking on increased gross profit margin, due to TSMC’s leadership status in 28-nanometer manufacturing. According to analysts, TSMC’s 28-nm capacity is running full, due to strong orders from clients seeking to make chips with smaller sizes and higher performance. While graphics chip manufacturer NVIDIA, a TSMC client, reported that its gross profit margin may drop due to lower-than-expected 28-nm yield rate, investors seemed to have ignored that, thinking that NVIDIA’s remarks were just a maneuver to get TSMC to lower its price. TSMC recently proposed to distribute cash dividends of NT$3 a share, and the proposal will be voted on during the firm’s shareholders meeting on June 12.