Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) fell sharply yesterday in heavy trade amid concerns over the outlook for the global integrated circuit (IC) sector, dealers said.
TSMC closed 2.91 percent lower at NT$60 with 106 million shares changing hands, while the TAIEX ended 0.07 percent higher at 8,202.54.
TSMC topped all other stocks in the market in terms of turnover, and the heavy selling even prompted the suspension of the stock’s trading for two minutes in early morning trade, according to the Taiwan Stock Exchange.
“Judging from the heavy trading volume, I suspect the sell-off largely came from foreign institutional investors,” Grand Cathay Securities (大華證券) analyst Mars Hsu said.
“Cautious sentiment over the world’s IC business cost TSMC shares a lot with fears that the company would start to feel the pinch in the fourth quarter of this year or the first quarter of next year,” Hsu said.
He added that it is unlikely that the company will continue to operate at full capacity in the fourth quarter as it did in the previous three quarters, since global demand has been compromised by weakening economic fundamentals.
In the second quarter of this year, TSMC posted NT$40.28 billion (US$1.28 billion) in net profit, up 19.7 percent from the first quarter and also up 64.8 percent from the same period a year ago.
Earlier this year, TSMC chairman Morris Chang (張忠謀) said he expected annual production value growth of the global IC sector next year would turn moderate at 5 percent, compared with an anticipated increase of 30 percent this year.
TSMC shares also fell on a newspaper report that the company’s capital expenditure may reach a new high of US$6 billion next year, following US$5.9 billion for this year and US$2.76 billion last year.
The Chinese-language Economic Daily News reported on Wednesday, citing unnamed foundry equipment suppliers, that TSMC is assessing the scale of its capital investment for the coming year and will announce the exact figure in January.
While TSMC is planning expansion projects to boost its edge over major competitors such as Globalfoundries Inc and Samsung Electronics Co, investors are concerned aggressive spending may cause an oversupply of chips, dealers said.
Goldman Sachs analyst Donald Lu (呂東風) said cut-throat competition is raging in the global contract chip foundry market, with global production capacity expected to triple by 2014.
TSMC would have to spend up to US$6 billion annually in capital expenditure between next year and 2015 to prevail in the current capacity expansion war, Lu said.
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