Sales of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, could pick up in the fourth quarter due to orders from its major client Apple Inc, a US-based brokerage predicted yesterday.
TSMC on Friday reported that its sales last month came in at a 15-month low of NT$59.95 billion (US$1.92 billion), down 15 percent from the previous month and 1 percent from a year earlier.
That brought TSMC’s second-quarter revenue to NT$205.4 billion, down 7 percent quarter-on-quarter, which was in line with the company’s forecast and market expectations.
“The month-on-month decline in June is likely the result of wafer order cuts in March. While order cuts are bottoming in June, higher-than-expected inventories at fabless players are resulting in a slow recovery in wafer orders,” the US-based brokerage said in a research note.
Under Taiwanese regulations, the name of the brokerage cannot be reported because it was offering specific forecasts that could influence the market.
The brokerage said it expects to see only a “muted recovery” of 5 percent quarter-on-quarter growth in TSMC’s third-quarter revenue, which is likely to be followed by a strong pick-up in the fourth quarter as the Taiwanese chipmaker may start to recognize revenue related to Apple’s next-generation A9 processors from September.
The brokerage firm also said that TSMC’s 10-nanometer (nm) progress is on track for high volume manufacturing in the second half of next year or early 2017, while TSMC’s rival Intel Corp is likely to push out its transition to 10-nanometer technology following a delayed launch of its 14-nanometer Skylake platform until the fourth quarter of this year.
“This implies that both Intel and TSMC are likely to arrive at 10nm at the same time (which has never happened in the past),” the US brokerage wrote.
“With the market focus shifting to 10nm FinFET products, we believe that TSMC’s execution in closing the timing and performance gap with Intel at 10nm will act as a rerating catalyst for the stock in 2016,” said the brokerage, which maintained its “overweight” rating on the stock with a price target of NT$165.
TSMC shares rallied 1.47 percent to close at NT$138.5 on the Taiwan Stock Exchange yesterday.
The Hsinchu-based chipmaker is scheduled to release last quarter’s financial results and its business outlook for next quarter during an investor conference on Thursday.
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