TSMC shares rebound on sales in July, rebuttal of rumors of order cuts
Shares of Taiwan Semiconductor Manufacturing Co. (TSMC,
) rebounded Tuesday morning after the world’s largest contract chip-maker reported on Monday a more than 30 percent month- on- month increase in sales for July, dealers said.
Buying also picked up after TSMC denied market speculation that its customers had pulled some of their orders for chips using the advanced 16 nanometer process from the Taiwanese company.
The rumors dragged down TSMC shares by as much as 5.63 percent at one point Monday.
As of 10:57 a.m. on Tuesday, TSMC shares had risen 1.94 percent to NT$131.50 (US$4.14), with 31.51 million shares changing hands after it fell 3.01 percent Monday. The weighted index on the Taiwan Stock Exchange was down 0.08 percent at 8,460.41.
“The July sales data encouraged investors to pick up TSMC shares soon after the stock market opened,” Ta Ching Securities Investment Consulting analyst Eric Lai said.
“I suspect that Apple’s orders to meet its needs for the launch of the next generation of iPhones served as the driver of the July sales growth.”
In a statement released Monday, TSMC reported consolidated sales of NT$ 80.95 billion for July, up 35 percent from a month earlier and also up 24.7 percent from a year earlier, reversing a slowdown in June, when the chip- maker’s revenue fell to monthly low for 2015.
The July sales were the highest ever for the month in TSMC’s history and the second highest level of any month this year, behind only January, when TSMC posted sales of
NT$ 87.12 billion.
ADRs Posted Gains Overnight
In the first seven months of the year, TSMC’s consolidated sales totaled NT$ 508.43 billion, up 28.3 percent from a year earlier.
“The sales growth in July made investors upbeat that TSMC will achieve its third quarter sales guidance,” Lai said.
At an investor conference in mid-July, TSMC said that due to prolonged inventory adjustments in the global semiconductor industry, its third quarter sales would only rise 0.7-2.2 percent from a quarter earlier to range between NT$207 billion and NT$210 billion.
“Following the release of the July sales data after the stock market closed Monday, TSMC’s American depository receipts (ADRs) posted gains overnight, which also led investors here to buy into the stock this morning,” Lai said.
TSMC’s ADRs closed up 2.78 percent on Wall Street Monday. Rumors about 16nm Process
TSMC shares faced heavy losses on Monday on rumors that its clients had cut their orders of chips made using TSMC’s advanced 16nm process.
In an unusual move, TSMC responded before the market closed, issuing a statement that denied the rumors and stressed that its 16nm process was proceeding smoothly.
The rebuttal helped TSMC’s shares recover some of its earlier losses Monday, and “TSMC’s denial also sparked buying this morning, as many investors felt relieved,” Lai said.
The 16nm process entered commercial production in the first half of this year. TSMC said it was possible that shipments of chips made with the 16nm process will rise significantly in the second half of the year.