Semiconductor sector boosts overall market cap, led by TSMC

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An man stares at an electronic board showing Taiwan share index in this file photo from Oct. 12, 2017. During the week to Oct. 13, the market cap of the local main board rose about NT$560.46 billion or 1.79 percent from a week earlier to NT$31.94 trillion, while the market cap of the semiconductor sector gained NT$473.5 billion, the data indicated. (CNA)

TAIPEI (CNA) – The local semiconductor sector served as a driver to the upturn in the Taiwan Capitalization Weighted Stock Index on the main board this week, boosting the overall market capitalization by almost 1.8 percent, according to the Taiwan Stock Exchange (TWSE).

Contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), the most heavily weighted stock in the local equity market, steamed ahead and led the gains of the semiconductor sector amid optimism toward the company’s outlook due to its lead over its peers in high-end technology development, data compiled by the TWSE showed.

During the week to Oct. 13, the market cap of the local main board rose about NT$560.46 billion or 1.79 percent from a week earlier to NT$31.94 trillion (US$1.06 trillion), while the market cap of the semiconductor sector gained NT$473.5 billion, the data indicated.

Among the winning semiconductor stocks, TSMC, the world’s largest pure wafer foundry operator, saw its market cap swelling by NT$337.1 billion, allowing the company to make the largest contribution to the sector as well as the broader market.

During the week, TSMC shares rose NT$13 or 5.79 percent to close at NT$237.50, pushing up its market cap to NT$6.16 trillion, the highest level among the companies listed on the local bourse. Led by TSMC, the semiconductor sub-index rose 6.1 percent and the weighted index gained 1.82 percent this week.

Market analysts said that TSMC made a strong showing this week after the integrated circuit giant, which currently takes a more than 50 percent share in the global contract chipmaking industry, reported a 17.89 percent sequential increase in sales for the third quarter, beating a 16 percent rise previously anticipated by the company.

The solid gains posted by TSMC shares came after foreign institutional investors aggressively bought into the stock. During the five trading sessions, foreign institutional investors bought a net 34.80 million TSMC shares, the TWSE data showed.

Analysts said investors have embraced high hopes that TSMC will continue to benefit from its efforts in developing sophisticated processes, including the 3 nanometer technology, to maintain its lead and leave rivals far behind. In late September, TSMC announced that it will build a sophisticated 3 nanometer process fab in Tainan to compete with Intel Corp. and Samsung Electronics Corp.

With construction expected to start by the end of 2020 and mass production scheduled to begin in 2022, the fab will become the first 3nm wafer plant in the world.

The 10nm process is the latest technology for TSMC to put into mass production. It is also developing 7nm and 5nm processes.

TSMC has scheduled an investor conference for Oct. 19 to detail its third quarter results and give sales guidance for the fourth quarter. The meeting is expected to be spotlighted by the market for next week.

Buying in TSMC also spread to other IC stocks, which moved the semiconductor sector even higher this week.

Among other stocks, IC designer MediaTek Inc.

聯發科) gained 10.53 percent to close at NT$322.00 at the end of the week. The market cap of MediaTek rose NT$49.04 billion, marking the second largest increase in the semiconductor sector, the data showed.

Memory chipmakers, such as Macronix International Co. (旺宏), Nanya Technology Co. (南亞) and Winbond Electronics Inc. (華邦) also saw their combined market cap rising by almost NT$30 billion during the week, the data indicated.

By Jackson Chang, Tien Yu-pin and Frances Huang