Shares of Taiwan Semiconductor Manufacturing Co (台積電, TSMC), the world’s largest contract chipmaker, fell yesterday morning amid worries over global demand in the second half of the year, dealers said.
Demand concerns were raised after US-based semiconductor equipment provider Applied Materials Inc cut its sales and earnings forecasts this year, citing weakening demand in Europe and China as a cause, they said.
TSMC fell 1.26 percent to end at NT$78.10 with 58.59 million shares changing hands, while the benchmark weighted index was up 0.09 percent.
“It seems that foreign institutional investors have turned cautious about TSMC’s earnings outlook and have decided to lower their holdings of the stock,” MasterLink Securities (元富證券) analyst Tom Tang (湯忠謙) said.
On Tuesday, foreign institutional investors were net sellers of 14.48 million TSMC shares.
Yesterday morning’s tumble came despite TSMC’s announcement a day earlier of strong second-quarter sales.
TSMC posted NT$128.06 billion (US$4.28 billion) in consolidated sales for the April-to-June period, up 21.37 percent from the first quarter. The numbers beat the company’s previous guidance of NT$126 billion to NT$128 billion for the period.
However, last month TSMC’s consolidated sales were down 1.6 percent from May to NT$43.43 billion. The company had reported record monthly highs for sales in both April and May.
“The June figure reversed monthly growth in the previous two months, leading many investors to fear that global demand is slowing down,” Tang said. “Even worse, the downgrade by Applied Materials has further dampened market sentiment, prompting investors to speculate that TSMC may not enjoy a peak-season effect in the third quarter.”
Applied Materials’ sales and profit downgrade came after US chipmaker Advanced Micro Devices Inc (AMD) gave a cautious guidance for its second-quarter results.
Amid escalating fears over the market outlook for the chip sector, the Philadelphia Semiconductor Index in New York fell 2.28 percent overnight. TSMC’s American depositary receipts also shed 1.63 percent on Wall Street.
Tang said investors should pay close attention to the third-quarter guidance TSMC is due to give at its investor conference scheduled for Thursday next week to get a clearer picture.
“Foreign institutional investors may continue to unload their TSMC shares if global financial markets encounter volatility caused by weakening economic fundamentals,” Tang said.
Despite the industry’s gloomy prospects, TSMC stock is likely to find technical support as it moves closer to NT$75, Tang said.