TSMC shares increase on 20nm process contribution optimism


TAIPEI — Shares of Taiwan Semiconductor Manufacturing Co. (TSMC) moved higher Friday morning after the world’s largest contract chip maker expressed optimism at an investor conference about the contribution of the advanced 20 nanometer process to its 2014 sales, dealers said. Many investors also hailed TSMC’s plan, mapped out at the investor conference Thursday, for massive capital expenditure next year, an important indication that the company is determined to maintain its technology lead over its peers in the global semiconductor foundry business, dealers said. The gains of more than 2 percent in TSMC’s American depositary receipts (ADRs) on Wall Street overnight showed that foreign institutional investors remained upbeat about the chip maker’s global competitiveness, dealers added. In yesterday’s trading, shares of TSMC had climbed 2.8 percent to NT$110, with 60.13 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.79 percent at the day’s high of 8,441.19 points.

“TSMC gave a strong impression at yesterday’s investor conference that the sophisticated 20nm process will contribution heavily to the company’s sales for 2014,” KGI Securities analyst Eason Lee said. “It seems that TSMC has made a better-than-expected progress in developing the 20nm process,” Lee said. At the investor conference, TSMC said it will start to supply chips on the 20nm process in the first quarter of next year and estimated that the operations could account for about 10 percent of its annual sales for 2014.

TSMC’s 16nm Process Expected To Mass Produce in 2015 “In my estimation, the 20nm process is likely to make up more than 10 percent of TSMC’s total revenue next year and could even hit 15 percent. The company’s estimate seemed a bit conservative,” Lee said. In addition to the 20nm process, TSMC is planning to begin production of chips on the 16nm process in 2015. “TSMC’s intensive efforts in research and development have paid off. More importantly, the chip maker will spend more to develop advanced processes, and the market is looking forward to its announcement of the 10nm process development,” Lee said. TSMC said its capital expenditure for 2013 could total US$9.7 billion and the figure is expected to rise in 2014. “I expect the 2014 capex to surpass US$10 billion, helping the company to maintain its lead in the global foundry industry,” Lee said. In the third quarter, chips made on the 28nm process, TSMC’s most advanced technology at the moment, accounted for 32 percent of its total sales in the third quarter, up from 29 percent in the second quarter. In the July-September period, TSMC’s consolidated sales rose by a quarterly 4.3 percent to NT$162.58 billion, the highest quarterly amount in the company’s history, while its net profit also hit a new high of NT$51.95 billion, up 0.3 percent from a quarter earlier. Lee said the third quarter results were in line with market expectations. Although TSMC said at the investor conference that its consolidated sales for the fourth quarter could fall 9.6-11.4 percent from the third quarter on inventory adjustments, the company remains the top pick of Bank of America Merrill Lynch among the semiconductor stocks in the Asia-Pacific region.