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TSMC Rises Most in Three Years on Forecast for Record Chip Sales

Taiwan Semiconductor Manufacturing Co. (2330) climbed the most in three years in Taipei after forecasting record revenue and spending on demand for chips used in mobile devices.

The chipmaker gained as much as 6.9 percent, the biggest jump since April 2009, to NT$89.80, before trading at NT$87.80 as of 10:14 a.m. in Taipei. There shares were headed for the highest close since listing in 1994. The benchmark Taiex (TWSE) index fell 0.3 percent

TSMC, whose clients include Qualcomm Inc. and Broadcom Corp. (BRCM), forecast second-quarter sales of NT$126 billion ($4.3 billion) to NT$128 billion, surpassing the NT$118 billion average of analyst estimates, amid rising orders for its most- advanced technology. That demand prompted Chairman and Chief Executive Officer Morris Chang to raise his spending plan as much as 42 percent to as high as $8.5 billion to boost capacity.

“TSMC will accelerate market-share gains by its broader technology and effective capacity gap for 28 nanometer and beyond,” said Ricky Liu, an analyst at KGI Securities. Liu estimates TSMC may expand its foundry market share to 52 percent this year from 49 percent in 2011, and to 54 percent in 2013. He has an outperform rating on the stock with a 12-month target price of NT$95.

Photographer: Maurice Tsai/Bloomberg

Silicon wafers manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC). Close

Silicon wafers manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC).

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Photographer: Maurice Tsai/Bloomberg

Silicon wafers manufactured by Taiwan Semiconductor Manufacturing Co. (TSMC).

The chipmaker yesterday reported first-quarter net income of NT$33.5 billion, surpassing the NT$29.9 billion average of 16 analysts’ estimates compiled by Bloomberg. Gross margin and operating margin also exceeded estimates.

Higher spending will increase costs and reduce the company’s gross margins this year, while allowing the company to boost sales and profitability from next year, Chief Financial Officer Lora Ho said yesterday.

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

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net.

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