The price of shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) rose yesterday, pushing the company’s market capitalization to a new high ahead of an investors’ conference scheduled for tomorrow.
“The strong buying showed many investors expect TSMC will give strong guidance for the first quarter at the conference,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said.
TSMC shares rose 1.32 percent to close at NT$346, their highest-ever price, while the benchmark TAIEX closed up 0.55 percent at 12,179.81. On Monday, TSMC shares rose 0.59 percent.
Based on the latest closing price, TSMC’s market capitalization yesterday rose to a record high NT$8.97 trillion (US$299.6 billion), up from NT$8.86 trillion the previous day.
TSMC’s edge in technology should help it continue to secure large orders from major clients such as Apple Inc, Advanced Micro Devices Inc, Qualcomm Inc and MediaTek Inc (聯發科), a Japanese brokerage said in a research note.
There is therefore no reason to worry about TSMC’s fundamentals, the brokerage said, forecasting that the company’s consolidated sales would grow by 18 to 20 percent from last year, when they grew 3.7 percent year-on-year to NT$1.07 trillion.
In the first quarter, the traditional slow season for the global semiconductor industry, sales are likely to be stable or slightly lower than the fourth quarter of last year, but increase 38 percent year-on-year, the brokerage said.
The brokerage raised its target price for TSMC shares to NT$395 from NT$340, while leaving its “buy” rating unchanged.
Despite all the positives, one potential question mark for TSMC remains Huawei Technologies Co (華為).
Tighter export restrictions on the Chinese company by Washington would make some of TSMC’s technologies unavailable to Huawei, analysts at Sanford C. Bernstein led by Mark Li wrote in a client note on Wednesday last week.
While the impact on revenue is expected to be a low single-digit percentage and TSMC would be able to pivot to other customers, a short-term impact would be “inevitable” as a “supply-chain realignment takes time,” the note said.
However, the overall outlook for the semiconductor industry is positive on growth drivers that include 5G technology adoption, Internet of Things momentum, robust data center demand and new game console launches, Credit Suisse Group AG analysts Randy Abrams and Haas Liu said in a report on Monday.
“Stocks are recovering from the prior decade ... and returning to pre-crisis valuations that can be sustained,” the analysts said.
However, with higher valuations after a strong rally last year, any product cycle disappointments or macroeconomic shocks could lead to short-term pullbacks, they added.
Additional reporting by Bloomberg
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