Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) could cut its growth estimates for the foundry sector and for the company, Citigroup said yesterday, following earlier remarks by the head of the world’s top contract chipmaker that reflected the impact Japan’s earthquake last month is having on the overall semiconductor industry.
Speaking at a technology symposium in San Jose, California, on Tuesday, TSMC chairman Morris Chang (張忠謀) lowered the company’s growth forecast for the global semiconductor industry, except the memory sector, to 4 percent this year, from the 7 percent growth estimate he offered to investors in Taipei on Jan. 27.
“The chairman lowered the company’s growth forecast ... mainly due to a ‘slight softening of the world economy’ after the Japan quake, instability in the Middle East and rising oil/raw-material prices,” Citigroup Global Markets analyst Roland Shu (徐振志) said in a note yesterday.
Shu said that Citigroup had contacted the Hsinchu-based chipmaker to clarify Chang’s downward revision to overall industry growth.
He said TSMC management had indicated the change was “mainly driven by a top-down view, rather than the supply chain.”
According to the Citigroup note, TSMC management said the key drivers of growth would -remain intact following the recent negative developments around the world, adding that mobile products, smartphones and tablets would still be the three major applications for the industry and offer the necessary support for foundry demand during these two years.
However, “based on TSMC’s internal model, the above issues [the Japan quake, Middle-East tensions and rising raw-material prices] will impact global GDP growth. The semiconductor industry’s growth, as such, has downside risk,” Shu said in the note.
Citigroup now believes TSMC is likely to cut its growth estimates for the foundry sector to about 10 percent, down from its original forecast of 14 percent, in addition to a cutting its forecast for its own growth to the high-teens, rather than its previous 20 percent growth forecast.
TSMC did not comment on -Citigroup’s forecast.
Despite TSMC’s weaker industry outlook, the US brokerage maintained its “buy” rating on TSMC stock with a target price of NT$86, which represents a 17.97 percent upside from yesterday’s closing price of NT$72.9 on the Taiwan Stock Exchange.
Deutsche Bank yesterday also rated TSMC with a “buy” rating and a target price of NT$84, saying the Taiwanese chipmaker would likely benefit from Texas Instruments Inc’s acquisition of National Semiconductor Corp, thanks to TSMC’s strength in 12-inch product designs.
Deutsche analyst Michael Chou (周立中) said in a report that Taiwan’s chip foundries, including TSMC and chip packagers such as Siliconware Precision Industry Co (矽品精密), could gain from taking more orders because of the recent consolidation in the US semiconductor industry.
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