Chipmakers lead decliners on fears of slump in 2006

Stocks declined yesterday, led by chipmakers such as Taiwan Semi-conductor Manufacturing Co (TSMC, 台積電), after its chairman Morris Chang (張忠謀) said new Chinese rivals will create overcapacity and he expects the industry to slump in 2006.

The TAIEX shed 34.13, or 0.6 percent, to 5,688.23. About two stocks declined for every one that gained. The futures contract for September delivery shed 1 percent to 5,688.

About 3.5 billion shares changed hands, or 22 percent below the average daily volume in the past three months. Shares worth NT$78.9 billion ($2.3 billion) were traded.

"New capacity in China may become a problem in the near future," said Edward Tseng, a fund manager at Ta Chong Investment Trust Corp (大眾投信).

TSMC fell NT$1.50, or 2.2 percent, to NT$66.50. United Microelectronics Corp (UMC, 聯電) fell NT$0.50, or 1.7 percent, to NT$28.30.

Some petrochemical makers, such as Formosa Plastics Corp (台塑) fell after a surge in oil prices. Formosa Plastics dropped NT$0.10 or 0.2 percent, to NT$49.20.

AU Optronics Corp (友達光電), fell NT$1.50, or 3.3 percent, to NT$44. Japan's Sharp Corp has filed a court case against AU Optronics in the US for infringing its flat-panel displays technologies, a Chinese-language newspaper reported.

Evergreen Marine Corp (長榮海運) rose NT$1.60, or 6.5 per-cent, to NT$26.40 as 14 shippers such as Singapore's Neptune Orient Lines Ltd and Japan's Mitsui OSK Lines Ltd plan to increase rates for carrying cargo to the US from Asia, by as much as 15 percent next May.