Taipei, Jan. 3 (CNA) Shares of Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, continued to steam ahead Thursday morning to breach the NT$100 mark for the first time in almost 12 years on the back of strong interest from foreign institutional investors, dealers said.
The buying reflected optimism that TSMC, by taking advantage of sophisticated production technology, is likely to supply 28 nanometer chips to Apple Inc., which is expected to boost the chip maker's bottom line, they said.
As of 11: 13 a.m., shares of TSMC had gained 1.41 percent to NT$101.00 (US$3.48) with 27.51 million shares changing hands. The weighted index was up 0.61 percent at 7,826.61 points.
"Judging from the turnover, I suspect that foreign institutional investors remained on the `buy' side this morning," Mirae Asset Management analyst Arch Shih said.
According to the Taiwan Stock Exchange, foreign institutional investors bought a net of 13.86 million TSMC shares Wednesday to hold 77.81 percent of outstanding shares of the foundry operator.
"TSMC, the most weighted stock in the local bourse, is always one of the favorites among foreign investors, who have been upbeat about the company's earnings outlook," Shih said.
"The market is expecting the global semiconductor business to stage a rebound in the second quarter of this year after inventory adjustments in the previous two quarters," he said.
Shih said that as foreign institutional investors have built up their long position contracts in the futures market, buying TSMC shares on the spot market is the best way for them to push the weighted index higher in a bid for futures profit.
"As foreign investors keep moving funds into Asia, they tend to park their money in stocks like TSMC, which have good fundamentals, as a safe haven," he said.
In the third quarter of last year, TSMC's net profit hit a record high in the company's history to NT$49.3 billion, or NT$1.9 in earnings per share, largely on rising demand for chips used in mobile communication devices.
The buying was also triggered by the market speculation that TSMC will secure orders from Apple to supply 28 nm chips, Shih said.
"Such speculation has been circulated in the market for some time. As a leader in the foundry business, it is possible that TSMC could become part of Apple's supply chain," Shih said.
He said that as demand for 28 nm ICs is on the rise, chips for the technology process are expected to account for 30 percent of TSMC's total sales in 2013, compared with 13 percent recorded in the third quarter of last year.
(By Jackson Chang and Frances Huang)