Investors continued to dump shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday, selling off 70.19 million, unconvinced the company will be able to secure its dominance in the advanced technology market and fearing the loss of a major contract to rivals Samsung Electronics Co.
In the last four sessions, overseas investors sold a net total of 99.59 million TSMC shares.
Yesterday’s selloff pushed the stock into its steepest decline in a year, 4.6 percent, to NT$124.5, with the volume of sales hitting the highest level in more than five months at 136 million shares.
On Wednesday, the world’s largest foundry posted a record-breaking quarterly net profit of NT$59.7 billion (US$1.99 billion) for last quarter, and estimated a better-than-expected sequential revenue growth of 14 percent for the quarter.
However, Maybank Kim Eng Securities Ltd analyst Warren Lau (劉華仁) downgraded its rating on TSMC to “sell” from “hold,” on the likelihood of Apple Inc and Qualcomm Inc moving 14nm finfield-effect-transistor (FinFET) orders to TSMC’s rivals is growing due to concerns about cost structure and performance.
“Despite its solid momentum, we have been cautious on TSMC shares due to the competition in 16nm or 14nm FinFET nodes,” Lau said in a report, titled The Party Ends Here.
Before yesterday, TSMC shares had risen by 22 percent this year.
The 16nm FinFET and 14nm FinFET chips are set to be the most advanced available in the near future.
Lau said TSMC introduced enhanced 16nm FinFET technology in the first quarter to improve performance, but the move was six months to nine months behind its rivals. The delay could result in loss of revenue growth from next year and could dampen TSMC’s growth outlook, he said.
The brokerage cut the target for shares of TSMC to NT$120 from NT$125.
On Wednesday, TSMC chairman Morris Chang (張忠謀) said the company would take a smaller share of the 16 nm FinFET chip market than competitors next year as it was late in offering the product. However, he said he was confident that TSMC would regain its leading position in the 16nm technology market in 2016.
TSMC is scheduled to ramp up 16nm production in the third quarter of next year, and expects the new technology to contribute a single-digit percentage of its revenue in the fourth quarter of next year, he said.
Morgan Stanley also expressed concern about the movement in shares of TSMC, saying fears over the loss of an order to Samsung are expected to continue to depress TSMC shares in the near future, so it maintained an “equal weight” recommendation on the stock.
The brokerage said the equal-weight rating was reenforced by expectations that as mid-range and low-cost smartphones have gained popularity, the high-end chip market that TSMC dominates could suffer from saturation.
It added that inventories in the semiconductor business in the second half of this year could be on the rise, so investors should adopt a cautious attitude toward TSMC.
While Morgan Stanley left an equal weight rating on TSMC shares unchanged, the brokerage revised upward its target price on TSMC to NT$118 from NT$104.
Citigroup Global Market Inc analyst Roland Shu (徐振志) also raised his firm’s target price of TSMC to NT$156 from NT$154, citing solid growth in demand for 20nm chips. Shu maintained his “buy” recommendation on the stock.
“While some in the market have higher expectations [of an adverse impact] on TSMC’s [16nm] FinFET chips, the overall impact on earnings is manageable,” Shu said.
Additional reporting by CNA
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS