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Shares of TSMC up after Q1 sales forecast upgraded

Shares of TSMC up after Q1 sales forecast upgraded

Taipei, March 12 (CNA) Shares of Taiwan Semiconductor Manufacturing Co. (TSMC) moved higher Thursday morning after the world's largest contract chip maker raised its sales forecast for the first quarter a day earlier, dealers said. Buying in the local bourse followed a strong showing of TSMC's American depositary receipts (ADRs) on Wall Street overnight in the wake of the positive lead, the dealers said. As of 11:11 a.m., shares of TSMC had added 3.54 percent to reach NT$117.00 (US$3.86), with 29.85 million shares changing hands. Led by TSMC's gains, the electronics sub-index was up 1.58 percent, while the weighted index on the Taiwan Stock Exchange was 0.83 percent higher at 8,756.69 points. "Investors here witnessed the chip maker's ADRs overnight rise and rushed to chase prices soon after the local bourse opened," Hua Nan Securities analyst Henry Miao said. "It seems that the market has been impressed by TSMC's move to raise its sales forecast." In a statement released after the market closed Wednesday, TSMC said it has raised its first-quarter sales guidance to NT$147 billion from an earlier estimate of NT$136 billion-NT$138 billion on the back of strong demand for chips made on the advanced 28 nanometer process. The revised sales forecast represented a 0.8 percent increase from the fourth quarter, indicating that slow-season effects in the quarter will not have an impact on TSMC's operations. The previous sales forecast represented a 5-7 percent sequential fall after the company took slow-season effects into account. After the release of the revised sales forecast, TSMC's ADRs rose 3.52 percent on Wall Street overnight, showing foreign investors' optimism toward the Taiwanese high-tech giant's profitability. "The upside to the first-quarter guidance comes mainly from the increase in demand for our 28nm wafers and from customers' active restocking of their inventories," TSMC Chief Financial Officer Lora Ho said in the statement. "The first-quarter upside is perhaps a good prelude to an already anticipated strong year," Ho said. Due to the strong demand for chips built on its 28nm process, TSMC has raised its forecasts of gross margin to 47 percent for the first quarter from an earlier estimate of 44.5 percent-46.5 percent. The chip maker has also upgraded its operating margin forecast to 35 percent from 32-34 percent. Before the sales forecast upgrade, the market had widely anticipated that TSMC would achieve its earlier first-quarter sales target after it posted NT$98.26 billion in sales for the first two months of this year, representing about 71 percent of the higher end of the old guidance. "TSMC has taken the lead in the 28nm process to secure large orders from mobile device vendors. Apple is one of the chip maker's major customers that have helped boost the first-quarter sales," Miao said. Miao said that as TSMC has entered a phase of producing chips on the more sophisticated 20nm process, it is possible that the company will win orders from its major clients this year. "I expect TSMC to post more than NT$8 in earnings per share for 2014, up from NT$7.26 recorded a year earlier," Miao said. "It remains one of the favorites of foreign institutional investors in Taiwan." (By Jackson Chang and Frances Huang)


Updated : 2021-05-07 19:37 GMT+08:00