Taiwan Semiconductor Manufac-turing Co (TSMC,
Ed Ross, president of TSMC's US unit, made the comment at an investors' conference held by Merrill Lynch & Co in San Francisco, according to company spokesman Chuck Byers, responding to a report on the Silicon Strategies Web site.
TSMC shares fell 2.7 percent to NT$43 in Taipei after Citigroup Inc analyst Andrew Lu (陸行之) cut his rating on the company to "sell" from "buy." The shares have lost 23 percent of their value since Jan. 1, compared with a 6 percent drop for the TAIEX. The company is at the peak of a business cycle, Lu said.
TSMC reports quarterly earnings on July 29.
Citigroup's "downgrade is another warning," said Winnie Tiao (刁明華), chief investment officer at HSBC Asset Management Taiwan.
TSMC and other companies in the made-to-order chip industry "could face overcapacity and price corrections next year," she said.
Lu's downgrade comes after the stock price tumbled from a 12-month peak in the third quarter last year, when its profit rose almost fivefold from the same period a year earlier. That was the largest profit gain in almost three years and came as the chip industry emerged from a recession.
Shares of United Microelectronics Corp (UMC, 聯電), the world's second-largest supplier of made-to-order chips, also fell by 2.7 percent to NT$21.40 in Taipei. Lu cut his rating for UMC to "sell" from "buy."
TSMC's chip plants exceeded full capacity for the first time in almost three years during the fourth quarter last year. Since that three-month period, the company's factory use has been higher than 100 percent.
TSMC denied a portion of the Silicon Strategies report that said the company expected prices to fall as a result of increases in its own production capacity and that of rival chipmakers in China.
Earlier in the week, chip bellwether Intel Corp reported negative news, including the growth of its inventories, which had instilled fears of price cutting that could affect sales for the company's Tai-wanese rivals.
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