Bank of America Corp’s Merrill Lynch & Co brokerage has cut its global semiconductor industry outlook to “negative” from “positive,” citing rising chip supply.
Intel Corp, the world’s largest chipmaker, and Texas Instruments Inc had their investment ratings lowered to “neutral” from “buy,” Dan Heyler, Hong Kong-based head of Asian semiconductor research, said yesterday.
Chip manufacturers including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest custom chipmaker, have raised equipment spending and production in anticipation of a rebound. Industry association WSTS Inc expects sales to climb 12.2 percent next year after declining 11.5 percent this year, it said on Tuesday.
“There’s a growing disparity between supply growth and consumption, therefore the downside risk to earnings is increasing,” Heyler said. “We think the supply chain will be aggressively replenished through to March.”
TSMC was reduced to “neutral” from “buy,” while United Microelectronics Corp (聯電), the second-largest custom chipmaker, and Advanced Semiconductor Engineering Inc (日月光半導體), the world’s largest chip tester and packager, were both lowered to “underperform” from “buy,” Heyler said.
Utilization of Asian chip production and testing capacity will decline by between 10 percentage points and 15 percentage points from a “mid-90s” percentage currently, Heyler said.
TSMC on Oct. 29 raised its spending budget for this year for factories and equipment to US$2.7 billion from a July 30 estimate of US$2.3 billion and said that figure would increase next year.
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