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TSMC shares hit by Europe brokerages' downgrade

TSMC shares hit by Europe brokerages' downgrade

Taipei, Jan. 9 (CNA) Shares of Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, came under heavy pressure Friday morning after two European brokerages downgraded their ratings on the stock, dealers said. TSMC shares fell soon after the local bourse opened, in the wake of the downgrades by BNP Paribas and Credit Suisse to "neutral" amid concerns over escalating competition in the chip industry this year, dealers said. With TSMC being the most heavily weighted stock in the local market, its losses affected the broader market, as investors generally ignored a rally on Wall Street overnight As of 11:58 a.m. shares of TSMC had fallen 2.54 percent to NT$134.50 (US$4.20), with 49.45 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.04 percent at 9,242.05 points. BNP Paribas said that although TSMC has raked in handsome profits from its 28 nanometer process, it remains to be seen whether the chip maker will pocket such large gains from its more advanced 20nm process amid escalating global competition. The brokerage said that Apple Inc. in particular may spread its orders among several chip makers for the next generation A9 processor, which means TSMC is unlikely to remain its sole supplier. This raises the question of whether TSMC's 20nm production will be at full capacity, BNP Paribas said. Credit Suisse, meanwhile, has turned cautious after an upbeat outlook on TSMC's share price for five years. The brokerage said TSMC shares may be affected by slower growth of the global mobile communications business this year. It also mentioned TSMC's lack of a diversified customer portfolio, saying this could create risks for the company as its competitors have been preparing to increase their yield rates. Some U.S.-based brokerages, however, remained upbeat about TSMC's earnings outlook, saying that the company is expected to allocate US$10.7 billion in capital expenditure in 2015 to boost its global competitiveness. These U.S. brokerages have maintained their buy recommendation on TSMC shares. TSMC is scheduled to release its December sales data after the market closes Friday. (By Jackson Chang and Frances Huang)


Updated : 2021-09-17 10:07 GMT+08:00