TSMC shares decline on Intel-Altera deal, Q3 sales
Shares of Taiwan Semiconductor Manufacturing Co. ( TSMC,
) moved lower Tuesday morning amid concerns that a deal for Intel Corp. to acquire smaller rival Altera Corp. will lead Altera to shift its orders with TSMC to Intel, dealers said.
The current selling extended from a session earlier after UBS Securities forecast a sequential sales increase of only 3 percent for TSMC in the third quarter as its customers adjust inventories, they said.
A large net sell of TSMC shares by foreign institutional investors on Monday also dampened investor sentiment toward the stocks on fears that foreign institutional selling will continue, they added.
As of 11:17 a.m., shares of TSMC had fallen 1.03 percent to NT$143.50 (US$4.64), with 17.86 million shares changing hands, after falling 0.68 percent on Monday. The weighted index on the Taiwan Stock Exchange was up 0.07 percent at 9,632.53.
“TSMC shares underperformed the broader market because the Intel-Altera deal led investors to think that the Taiwanese chip-maker will lose one of its major buyers,” investment consulting firm CMoney analyst Chen Wei-tai said.
“Investors are watching closely how fiercer competition in the global integrated circuit industry will affect TSMC.”
Intel announced overnight that it had agreed to acquire Altera, a programmable logic semiconductors supplier, for US$16.7 billion. It was Intel’s biggest deal since 2011, when it acquired software security solutions firm McAfee for US$7.7 billion. The deal to buy Altera is scheduled to be completed in six to nine months.
The Intel-Altera deal was the second major merger in the global semiconductor industry in just five days after Avago announced it was buying Broadcom for US$37 billion.
After the announcement of the Intel-Altera deal, TSMC’s American depositary receipts fell 0.58 percent on Wall Street Monday.
Intel’s Acquisition Target
Dealers said there has been speculation that Intel is now setting its sights on Qualcomm as its next acquisition target, and they cautioned that if the rumor turns out to be true, TSMC could be dealt a second heavy blow by losing another heavyweight customer.
“In fact, even before the Intel deal surfaced, TSMC shares appeared weak because of a recent report by UBS Securities that forecast an only 3 percent sequential sales increase in the third quarter,” lower than an earlier forecast of an 8 percent increase by other foreign brokerages, Chen said.