TSMC shares decline on In­tel-Al­tera deal, Q3 sales

The China Post - - LOCAL -

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.

Fiercer Com­pe­ti­tion

“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.

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