High-tech pre­mier

TSMC shares ex­tend losses amid sales con­cerns

The China Post - - TAIWAN BUSINESS -

Shares of Tai­wan Semi­con­duc­tor Man­u­fac­tur­ing Co. (TSMC, ) ex­tended losses from a ses­sion ear­lier Thurs­day morn­ing as HSBC Se­cu­ri­ties cut a fore­cast for the world’s largest con­tract chip­maker’s sales growth rate, cit­ing higher cus­tomer con­cen­tra­tion risks, deal­ers said.

The cur­rent sell­ing is likely to have come from for­eign in­sti­tu­tional in­vestors, which raised the num­ber of net short­po­si­tion con­tracts in the fu­tures mar­ket and tended to cut hold­ings in large-cap stocks, like TSMC, in the spot mar­ket for profit, the deal­ers said.

As of 11:51 a.m., shares of TSMC had lost 1.75 per­cent to NT$140.50 (US$4.56), with 36.83 mil­lion shares chang­ing hands af­ter a 0.69 per­cent fall seen a day ear­lier. The weighted in­dex on the Tai­wan Stock Ex­change was down 2.07 per­cent at 9,358.81 points.

“Af­ter TSMC shares fell be­low the 120-day mov­ing av­er­age at around NT$143.70, the stock has turned tech­ni­cally weaker,” Hua Nan Se­cu­ri­ties an­a­lyst Kevin Su said. “So such neg­a­tive leads as the HSBC Se­cu­ri­ties re­port prompted in­vestors to sell more.”

In a re­search note, HSBC Se­cu­ri­ties said that the global semi­con­duc­tor in­dus- try has been in a merger ma­nia, mean­ing that chip-mak­ers, in­clud­ing TSMC and United Mi­cro­elec­tron­ics Corp. (UMC, ), could have smaller cus­tomer bases. The wor­ries were trig­gered by three re­cent merger and ac­qui­si­tion deals in the in­te­grated cir­cuit in­dus­try, worth more than US$70 bil­lion.

In­tel to Ac­quire Al­tera

The lat­est was a deal in which In­tel an­nounced June 1 that it had agreed to ac­quire Al­tera, a pro­gram­mable logic semi­con­duc­tor sup­plier, for US$16.7 bil­lion. It was In­tel’s big­gest deal since 2011. As Al­tera is one of TSMC’s buy­ers, many in­vestors fear that Al­tera will shift or­ders to In­tel from TSMC, the deal­ers said.

There has been spec­u­la­tion that In­tel has set its sights on Qual­comm Inc., an­other TSMC cus­tomer, for the next ac­qui­si­tion, the deal­ers added.

HSBC Se­cu­ri­ties said that although the lat­est three merger deals will have only a limited im­pact on TSMC, if such merger ma­nia con­tin­ues, the Tai­wanese chip­maker could wit­ness its cus­tomer base shrink­ing over the next few years. The bro­ker­age said that TSMC’s sales growth rate over the next few years could range be­tween 10 per­cent and 15 per­cent from a 20-30 per­cent in­crease over the past few years.

“Whether TSMC will suf­fer such a se­ri­ous blow due to con­sol­i­da­tion in the IC in­dus­try as the HSBC Se­cu­ri­ties fore­cast re­mains to be seen.

But the re­search note sim­ply en­cour­aged in­vestors to sell for the mo­ment amid cau­tious sen­ti­ment,” Su said.

For­eign In­sti­tu­tional Sell­ing

Su said that the weak­ness of TSMC shares in re­cent ses­sions largely came from for­eign in­sti­tu­tional sell­ing. Be­fore Thurs­day, ac­cord­ing to Su, for­eign in­sti­tu­tional in­vestors had sold a net 69 mil­lion TSMC shares since the be­gin­ning of May, and dur­ing the pe­riod, the stock had lost 2.72 per­cent.

“As for­eign in­sti­tu­tional in­vestors boosted the num­ber of their net short po­si­tion con­tracts yes­ter­day, I think that they kept sell­ing TSMC shares this morn­ing,” Su said.

Su said that the stock could face more down­ward pres­sure un­til it moves to the near­est tech­ni­cal sup­port level at around NT$140, so with TSMC shares’ weak­ness per­sist­ing, it is un­likely that the broader mar­ket will climb out of the cur­rent dol­drums.


Pre­mier Mao Chi-kuo, right, in­ter­acts with a com­pany of­fi­cial yes­ter­day at the 2015 COM­PU­TEX Taipei ex­hi­bi­tion in Nan­gang. In at­tend­ing the tech­nol­ogy fo­rum fol­low­ing the pres­i­dent’s visit ear­lier in the week, Mao tried out sev­eral new prod­uct re­leases and lis­tened to com­pany of­fi­cials pre­sent­ing their of­fer­ings.

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