Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) share price declined 1.11 percent yesterday as the world’s top contract chipmaker could face increasing impairment loss from holding money-losing solar cell maker Motech Industries Inc (茂迪).
TSMC dropped to NT$80.5 after Motech on Monday reported losses of NT$3.23 billion (US$108 million) for the first half of this year, compared with net profits of NT$35 million in the same period last year.
Motech attributed the losses to price declines because of weak demand and oversupply as well as a one-time loss of NT$1.89 billion after shutting down AE Polysilicon Corp, a unit in the US.
For the whole of last year, Motech lost NT$2.49 billion, the company’s data showed.
The company yesterday said sales plunged 58.84 percent last month year-on-year, or down 11.4 percent month-on-month, to NT$1.9 billion.
TSMC bought a 20 percent stake in Motech in December 2009 for NT$6.2 billion to enter the emerging solar power business. The chipmaker paid NT$82.7 per share for the 75.32 million Motech shares.
However, weak financial results and lackluster business outlook drove Motech shares down to NT$26.7 yesterday, which meant TSMC would book about NT$4.22 billion in impairment loss.
“TSMC bought Motech for strategic purpose and that goal has been achieved,” TSMC chairman and CEO Morris Chang (張忠謀) told reporters on Tuesday.
Now, Motech was just a “financial investment,” Chang said, implying that TSMC could sell its stake in Motech sometime in the future.
In the long term, Chang said TSMC still held a bullish view about the solar market. The chipmaker operates a fully owned solar subsidiary, TSMC Solar Ltd (台積太陽能).
Separately, United Microelectronics Corp (聯電), the world’s No. 2 contract chipmaker, yesterday reported its strongest monthly revenues in 18 months for last month.
Revenues grew 3.49 percent to NT$9.61 billion last month, compared with NT$9.29 billion in June. That was a year-on-year expansion of 9.12 percent from NT$8.81 billion.
UMC is expected to grow revenue by 2 percent to 6 percent sequentially this quarter from last quarter’s NT$27.62 billion, KGI Securities (凱基證券) forecast.
That was slightly lower than 7 percent expansion estimated earlier by KGI.