Alexa
  • Directory of Taiwan

Local IC stocks haunted by U.S. high-tech fall; TAIEX dives

Local IC stocks haunted by U.S. high-tech fall; TAIEX dives

Taipei, July 23 (CNA) The local semiconductor sector trended lower Thursday morning after investors here took cues from a plunge in the Philadelphia Semiconductor Index overnight to dump local integrated circuit (IC) heavyweights such as Taiwan Semiconductor Manufacturing Co. (TSMC, ???), dealers said. An announcement overnight by U.S.-based mobile IC supplier Qualcomm Inc. that it will cut its workforce by 15 percent prompted investors to think that the U.S. firm has become cautious about the global semiconductor industry's outlook, the dealers said. As of 11:08 a.m., the local semiconductor sub-index had fallen 2.25 percent to 106.43 points. Among the losing IC stocks, shares of TSMC had lost 1.44 percent to NT$137.00 (US$4.25) and IC designer MediaTek Inc. (???) had shed 1.85 percent to NT$344.00. Led by the losses suffered by the IC sector, the weighted index on the Taiwan Stock Exchange was down 1.17 percent at 8,814.65 points. "The steep drop in semiconductor stocks in the U.S. market overnight hurt investor sentiment on the local bourse. It was not surprising that domestic IC stocks came under heavy pressure soon after the market opened," equity analyst Eric Lai said. The Philadelphia Semiconductor Index ended down 2.52 percent. Lai said that the book-to-bill ratio in the North American semiconductor industry for June kept falling, indicating that global demand has been on the decline, which dealt another blow to the local semiconductor sector. The June book-to-bill ratio fell to 0.98 from May's 0.99, marking the third consecutive month in which the ratio dropped, according to the U.S.-based Semiconductor Equipment and Materials Institute. A book-to-bill ratio of over 1 indicates that demand is higher than supply, while a ratio of under 1 signals weakening demand. "After TSMC gave lower-than-expected sales guidance for the third quarter last week, investors have become wary of the outlook for the industry. And the weakening book-to-bill ratio raised worries," Lai said. In an investor conference held July 16, TSMC said that its third-quarter sales could rise 0.7 percent to 2.2 percent from a quarter earlier, and the forecast missed an earlier market estimate of a 5 percent increase. "A cut in workforce by Qualcomm points to possible weakness in global demand. Investor confidence in the global semiconductor industry has been shaken and that's why they scrambled to cut their IC holdings here," Lai said. Qualcomm said the workforce cut is expected to cut costs by US$1.4 billion. Lai said that DRAM stocks also encountered pressure in the wake of a product price competition resulting from a supply glut after South Korea's Samsung Electronics Co. and SK Hynix Inc. raised their production capacities. Among the falling DRAM stocks, shares of Nanya Technology Corp. (???) had fallen 3.15 percent to NT$35.40 and Inotera Memories Inc. (???) had lost 3.73 percent to NT$19.35. "Without a stable high-tech sector, it is unlikely that the broader market will climb out of the doldrums," Lai said. He said that TSMC could find technical support at around NT$134.00. (By Frances Huang)


Updated : 2021-09-19 17:05 GMT+08:00