Morgan Stanley raises rating on TSMC

Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world's largest made-to-order chip supplier, had its rating raised to "overweight" from "equal weight" at Morgan Stanley, which cited a better outlook for the industry.

Morgan Stanley's Sunil Gupta set a 12-month price estimate for the company of NT$79 (US$2.4), a 6.8 percent increase on the NT$74 rating on Jan. 11, the analyst said in a research report yesterday. TSMC shares closed 1.6 percent higher at NT$62.70 at the 1:30pm in Taipei.

Gupta cited TSMC's ability to achieve capacity growth targets with lower capital spending, the recent New Taiwan dollar depreciation against the US currency and the made-to-order chip industry's restraint in increasing production capacity as factors behind his upgrade.

The Hsinchu-based company's fourth-quarter sales grew faster than those of closest rival United Microelectronics Corp (聯電), driven by customized chips used in Microsoft Corp game consoles and Motorola Inc high-speed mobile phones. Chairman Morris Chang (張忠謀) is spending more than rivals to build larger, more efficient plants.

TSMC said on Jan. 26 that fourth-quarter profit rose 53 percent to a record, on demand for chips used in Xbox game consoles and Razr cellphones. Net income increased to NT$33.9 billion from NT$22.2 billion a year earlier.