Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) shares yesterday rallied to a 13-year high, bringing the world’s top contract chipmaker’s market capitalization to a record-high NT$3.02 trillion (US$99.5 billion).
The stock surge followed the company’s announcement on Wednesday that it was raising its revenue forecast for this quarter by more than 6.5 percent to NT$147 billion, from its previous estimate of NT$136 billion to NT$138 billion, citing rising demand for 28-nanometer (nm) chips and customer restocking.
TSMC closed 3.1 percent higher at NT$116.50, its highest since Nov. 8, 2000, when it hit NT$117.
The company’s new sales guidance prompted Credit Suisse Securities to raise its price target for the stock and led Barclays Capital to revise its earnings per share forecast for this quarter.
TSMC is the most valuable stock on the local bourse, followed by Hon Hai Precision Industry Co (鴻海精密), a major supplier of Apple Inc’s iPhones and iPads. Hon Hai’s market capitalization reached NT$1.13 trillion yesterday after its shares climbed 1.65 percent to NT$86.10.
TSMC has benefited from its lead over its peers in wafer process technology. In addition to 28nm technology, the firm has embarked on the more advanced 20nm technology and is expected to start 16nm production next year.
JPMorgan Securities analyst JJ Park said that TSMC’s new financial forecast confirmed his expectation of “a strong comeback in 28nm demand from MediaTek (聯發科), Hisilicon (海思半導體), Qualcomm... and ongoing game console strength from AMD [Advanced Micro Devices].”
Park said TSMC has improved its 20nm wafer yield to 50 percent for Apple Inc’s chip orders, with wafer output expected to hit as high as 7,000 units in May and to increase to about 27,000 wafers in July or August.
As Samsung has made little progress in 20nm chip production and GlobalFoundries might skip 20nm technology, TSMC may be the sole supplier of 20nm chips, Park said.
“This should serve as the next catalyst for consensus upgrades in the coming quarters,” he said in a note on Wednesday.
Meanwhile, Credit Suisse analyst Randy Abrams increased his net profit forecast for TSMC to NT$54.43 billion, or NT$2.1 per share, this year, from his prior estimate of NT$48.8 billion, or NT$1.88 a share.
“The upside strength reflects inventory restocking orders as inventory has reduced to too lean [levels] and from market share recovery on communications and gaming from its foundry competitors,” Abrams said in a report issued on Wednesday, while adjusting his share price target to NT$130 from NT$122.
Barclays Capital said it remained upbeat about TSMC’s outlook and raised its earnings per share forecast for the first quarter to NT$1.71 from NT$1.51.
Yuanta Securities (元大證券) said that TSMC’s upward financial adjustment would boost local tech sentiment. In addition to TSMC, Yuanta said Hermes Microvision Inc (漢微科), Kinik Co (中國砂輪), Shih Her Technologies Inc (世禾科技) and Grand Plastic Technology Corp (弘塑科技) are its top picks in the tech sector.
Additional reporting by CNA