Jan. 7 (Bloomberg) -- Taiwan Semiconductor Manufacturing Co., the world’s largest custom-chip maker, declined in Taipei trading after Macquarie Group Ltd. became the only brokerage to advise selling the shares.

The stock dropped NT$1.05, or 2.3 percent, to NT$44.55 at the close of trade after earlier climbing as much as 1.9 percent. About 71 million shares were traded, double from yesterday and 17 percent more than the six-month daily average. The benchmark Taiex index advanced 1.3 percent. Macquarie today lowered its recommendation to “underperform,” equivalent to a “sell,” from “neutral.”

Macquarie lowered its 12-month price estimate to NT$35 from NT$38 and became the first of 26 brokerages tracked by Bloomberg to recommend investors sell the stock. Fifteen analysts have the equivalent of a “buy” rating and 10 recommend “hold.”

“Despite aggressive cost reductions, TSMC may not be able to break even at the operating level,” Hong Kong-based analyst Warren Lau wrote in a report today. “With the utilization rate likely to hover around 30 percent to 40 percent, we believe TSMC could find it hard to generate meaningful earnings.”

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net

Last Updated: January 7, 2009 02:26 EST