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TSMC shares up on ADR gains, 10nm process progress

TSMC shares up on ADR gains, 10nm process progress

Taipei, July 17 (CNA) Shares of Taiwan Semiconductor Manufacturing Co. (TSMC, ???) moved higher Friday morning as investors here took cues from the gains posted by its American depositary receipts (ADRs) on Wall Street overnight to raise their holdings in the stock on the local bourse, dealers said. While TSMC gave lower-than-expected sales guidance for the third quarter in an investor conference held Thursday, the current buying of the stock showed that investors shifted their focus to the chip maker's smooth development of the advanced 10 nanometer process, they said. As of 11:01 a.m., shares of TSMC had added 2.20 percent to NT$139.50 (US$4.50) with 32.23 million shares changing hands. The weighted index on the Taiwan Stock Exchange was up 0.17 percent at 9,057.24 points. "The ADR gains overnight were encouraging to investors today. It seemed that foreign investors still have faith in TSMC, in particular in its sophisticated 10nm process," MasterLink Securities analyst Tom Tang said. TSMC's ADRs fell 3.81 percent at one point due to the weaker-than-expected third quarter sales forecast, but soon staged a strong rebound, recouping all of the earlier losses to close up 0.75 percent. "To my knowledge, foreign institutional investors have been impressed by TSMC's efforts in the 10nm process development. Based on the progress, TSMC remains competitive against rival U.S.-based Intel Corp. in that particular technology," Tang said. According to TSMC, the chip maker is scheduled to launch commercial production of the 10nm process in the fourth quarter of 2016 and start to ship chips made on the process in the first quarter of 2017, and such development showed the Taiwanese firm is narrowing its technology gap with Intel. "Although the third quarter's sales guidance disappointed investors, such disappointment had been factored into TSMC's share price in recent sessions so that investors started to pick up the stock by taking advantage of its relatively low valuation," Tang said. TSMC said that its consolidated sales for the July-September period could range between NT$207 billion and NT$210 billion, up only 0.7-2.2 percent from a quarter earlier, and the forecast was lower than an early market estimate of a 5 percent sequential increase. TSMC said that the slower growth forecast reflected extended inventory adjustments in the global semiconductor industry. TSMC has also cut its 2015 sales growth forecast for the world's semiconductor business to 3 percent from 4 percent and cut its sales growth for the global wafer foundry industry to 6 percent from 10 percent. But, TSMC still sticks to its forecast that the company's sales will grow at a double digit pace, beating the entire market. "Foreign institutional investors have sold a big chunk of TSMC shares recently," Tang said, "Judging from the current gains and trading volume of TSMC shares, I suspect that foreign institutional investors shifted to the buy side today." According to Tang, foreign institutional investors have sold a net 278.91 million TSMC shares on the local main board since late April. Tang said that TSMC is a fundamentally sound company, referring to its earnings per share of NT$6.11 for the first half of this year. The market has expected that the chip maker will make more than 12 in EPS for the entirety of 2015. "Based on the profit forecast, TSMC's valuation remains attractive," Tang said. (By Jackson Chang and Frances Huang)


Updated : 2021-09-24 07:30 GMT+08:00