TSMC Climbs to Record After UMC Forecasts Operating Loss

Taiwan Semiconductor Manufacturing Co. rose to a record in Taipei trading after a smaller rival forecast an operating loss, showing the world’s largest custom chipmaker is boosting its technology advantage.

TSMC climbed as much as 3.3 percent to NT$108.50, the highest level since it started trading in 1994, and was at NT$106.50 as of 10:44 a.m. Taiwan’s benchmark Taiex index, of which it’s the largest member, rose 0.4 percent. Trading resumed today after halting Feb. 6 for the Lunar New Year break.

United Microelectronics Corp. may post an operating loss of about NT$1 billion ($34 million) this quarter with the introduction of more advanced production technology being “slower than expected,” the Hsinchu, Taiwan-based company said Feb. 6. TSMC, with five times the revenue, on Feb. 8 reported a 28 percent rise in January sales from the previous month. UMC fell as much as 2.6 percent today.

“UMC’s results and outlook showed that they’re doing worse than expected and that TSMC is extending its technology lead,” said Steven Pelayo, who rates TSMC overweight and UMC neutral at HSBC Holdings Plc in Hong Kong. “UMC has fallen by the wayside and TSMC is moving ahead.”

Clients such as Qualcomm Inc. and Nvidia Corp. contract with foundries TSMC and UMC to manufacture chips based on their own designs. A shortage of capacity at TSMC to make semiconductors using 28-nanometer technology, the most advanced available, meant both clients missed out on sales last year.

UMC planned to offer similar production techniques last quarter. That timeline has been delayed, and UMC doesn’t expect to see a “significant” contribution from 28-nanometer processes in the first half, Chief Executive Officer Yen Po-wen told investors Feb. 6. Yen, who became CEO in November, said he plans to boost research spending.

Strong January sales show TSMC continues to gain orders, which is probably boosting sentiment in trading today, HSBC’s Pelayo said.

TSMC has gained 10 percent in Taipei trading this year, while UMC has fallen 5.1 percent.

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