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TSMC Sales Rise to Record on Demand for New Smartphones

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July 11 (Bloomberg) -- Taiwan Semiconductor Manufacturing Co. gained after posting record quarterly sales as customers including Apple Inc. prepare for the release of new devices.

The chipmaker rose 1.5 percent to close at NT$136.50 in Taipei trading, extending a 29 percent gain this year. Second-quarter sales were NT$183 billion ($6.1 billion) according to Bloomberg calculations based on monthly sales reported yesterday. That’s ahead of the NT$181.4 billion average of 23 analyst estimates compiled by Bloomberg.

Apple’s suppliers in China this month are starting mass production of the company’s next-generation iPhones with larger screens. TSMC in April raised its full-year market outlook and said smartphone demand is healthier than expected even as competition from Globalfoundries Inc. and Semiconductor Manufacturing International Corp. intensifies.

“We remain positive into strong results, and see the story post the Apple ramp-up shifting toward a moderating growth,” Randy Abrams, a Taipei-based analyst at Credit Suisse Group, wrote in a note yesterday. Abrams rates the stock outperform and raised his price target 9 percent to NT$150 after the sales announcement.

Apple has contracted TSMC to make chips for its devices using the Taiwanese company’s latest 22/20 nanometer production technology, analysts including Mark Li at Sanford C. Bernstein wrote in a report yesterday.

Samsung Electronics, which manufactures chips, phones and TVs, and HTC Corp. missed analyst estimates for quarterly revenue amid weakness in their smartphone sales. Samsung said this week it expects a rebound in the smartphone market in the third quarter as it releases new models.

Chip designers such as Broadcom Corp. and Qualcomm Inc. typically order chips three to six months in advance of the release of an end-product.

Second quarter sales were calculated by adding data from April and May to June revenue of NT$60.3 billion released yesterday.

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

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net Aaron Clark, Dave McCombs

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