Shares in the local semiconductor sector trended lower yesterday as investors took cues from a cautious forecast released by US chipmaker Texas Instruments Inc (TI) for the fourth quarter, dealers said yesterday.
Market sentiment was also dampened by a 2.81 percent fall in the widely watched Philadelphia Semiconductor Index on Thursday, amid concerns over weakening demand in the global IC business, they said.
Taiwan’s sub-semiconductor index fell 2.06 percent, while the benchmark TAIEX fell 1.29 percent to 6,893.3 points.
Among the large-cap chipmakers, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), fell 2.88 percent to NT$74.1 and rival United Microelectronics Corp (UMC, 聯電) lost 2.73 percent to NT$12.45.
In the IC design sector, Media-Tek Inc (聯發科) advanced 1.17 percent to NT$260, but MStar Semiconductor Inc (晨星半導體) dropped 1.77 percent to NT$139 after reporting a decline in last month’s sales on Thursday.
“TI’s gloomy assessment simply confirmed the market’s worries about a global down cycle for chipmakers,” Grand Cathay Securities (大華證券) analyst Mars Hsu (徐振家) said.
TI lowered its outlook for its fourth-quarter revenue and profit on Thursday, saying demand had weakened for a variety of products that use its chips.
The weak economy in the US and elsewhere has hurt demand for electronic devices that use TI’s semiconductors.
Dallas-based TI said it saw “broadly lower demand across a wide range of markets, customers and products” except for wireless-applications processors, which are used in smartphones and tablets.
The company said that it expected to earn between US$0.21 and US$0.25 per share in the fourth quarter, down from an earlier forecast of between US$0.28 and US$0.36 per share. It forecast revenue of US$3.19 billion to US$3.33 billion, down from a previous range of US$3.26 billion to US$3.54 billion.
Analysts were expecting the company to earn US$0.35 per share on revenue of US$3.41 billion, according to a survey by FactSet.
In October, the US company reported its third-quarter net income fell 30 percent from the same period last year as demand for chips weakened and revenue fell in all four of the company’s segments.
Hsu said that although many chipmakers at home and abroad have been focusing on adjusting inventory, end-user demand has not yet rebounded amid a sluggish global economy.
“With demand on the decline, I do not think the nightmare for the IC industry will end in the fourth quarter, but rather it will continue into the first quarter of next year,” Hsu said.
He added it was no surprise that foreign institutional investors cut their holdings in liquid IC heavyweights such as TSMC, UMC and MediaTek to meet demand for fund redemptions amid the current financial turmoil.
“Except for TSMC, which has taken the lead in high-end chip production, Taiwanese chipmakers have been squeezed by fiercer-than-ever competition,” Hsu said. “In a down market, this situation has been amplified.”
There have been concerns that TI could cut product prices to boost sales and to attain a larger market share, a move that could further hurt the profitability of Taiwanese firms, Hsu said.