Taiwan Semiconductor Manufacturing Co., the world’s largest contract manufacturer of chips, surged to a record after boosting its first-quarter sales forecast on stronger demand for mobile phones.
TSMC climbed 3.1 percent to close at NT$116.50, the highest since shares listed in September 1994, according to data compiled by Bloomberg. Its New York-listed ADRs climbed 3.5 percent overnight.
Customers restocking inventory and stronger demand for third-generation network smartphones in China spurred TSMC to raise its sales outlook. Revenue is now expected to be about NT$147 billion ($4.8 billion), compared with Jan. 16 forecast for sales of as much as NT$138 billion, the Hsinchu-based company said in a statement yesterday.
“The revised guidance is a surprise to the market,” said Carlos Peng, who rates the stock add at Fubon Financial Holding Co. in Taipei and raised his 6-month price target to NT$128 after the announcement. “Inventories are slightly below normal seasonality, while end-product smartphone demand in China including 3G and LTE are driving chip sales.”
TSMC shares have gained 10.4 percent this year, outpacing a 1.6 percent advance in the benchmark Taiex index, of which it’s the largest component.
TSMC also raised its profitability outlook for the period. Gross margin will be around 47 percent, from a previous forecast of 44.5 percent to 46.5 percent. Operating margin will be about 35 percent, compared with its earlier projection of 32 percent to 34 percent.
“The upside to the first quarter guidance comes mainly from the increases in demand for our 28-nanometer wafers and from customers’ active restocking of their inventory,” TSMC said in yesterday’s statement. “The first quarter upside is perhaps a good prelude to an already anticipated strong year.”
Strong demand for Qualcomm Inc.’s entry-level 4G chips and MediaTek Inc.’s 3G chips, both aimed at the China market, helped prompt the stronger orders, Fubon’s Peng said. Broadcom Corp. communications chips and Advanced Micro Devices Inc. processors are also driving demand for TSMC, he said.