Deutsche Securities Asia Ltd raised its earnings forecast for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) by 4 percent, saying that better progress in ramping up next-generation 40-nanometer technology may help the world’s biggest contract chipmaker gain more market share and win new orders for higher-margin chips.
TSMC may earn NT$82.52 billion (US$2.51 billion) this year, higher than the NT$79.09 billion previously forecast by Michael Chou (周立中), a semiconductor analyst at Deutsche Securities’ Taipei branch.
Earlier this year, investors were concerned that TSMC was slow in improving its yield rate for advanced 40-nanometer technology, which caused complaints from customers such as Nvidia Inc. Late last month, TSMC told investors the yield rate had double over the past month, but it did not provide specific figures.
“We expect the 40-nanometer technology’s yield rate to improve from less than 40 percent in the second quarter to more than 60 percent for more products [such as handset chips and LCD controllers] by the end of the third quarter,” Chou said in a report dated Aug. 13.
The improvement should enable the company to expand its market share from tier-two foundries from the second half of the year and win new orders, Chou said.
From the fourth quarter, TSMC is expected to ship chips made on 40-nanometer technology for new customers including handset chip suppliers Broadcom Inc and Texas Instruments Inc, in addition to 50 current clients, Chou said.
TSMC earned 1 percent of its revenues from chips made on 40-nanometer technology last quarter, while 28 percent came from 65-nanometer technology, TSMC said.
With the introduction of new products like embedded CPUs, TSMC may beat most revenue forecasts from analysts in the fourth quarter, Chou said. Instead of making between 10 percent and 20 percent lower quarter-on-quarter revenues as forecast by most analysts for next quarter, TSMC may see a decrease of less than 10 percent, he said.
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