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TSMC shares rise despite lower sales forecast

2019/02/18 11:59:20

Taipei, Feb. 18 (CNA) Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) moved higher Monday in line with the broader market, which was boosted by a rise on Wall Street at the end of last week, dealers said.

Although TSMC has cut its sales forecast for the first quarter due to a production mishap, investors are hoping that the chipmaker will issue fat cash dividends for last year on the back of its record high annual net profit, dealers said.

As of 11 a.m. Monday, shares of TSMC had risen 1.32 percent to NT$230.00 (US$7.46) with 9.57 million shares changing hands on the Taiwan Stock Exchange, while the weighted index (Taiex) was up 0.82 percent at 10,147.10 points.

Soon after the local equity market opened, TSMC shares began climbing as investors took cues from the performance of its American depositary receipts, which closed up 0.08 percent Friday despite the chipmaker's downward revision of first-quarter sales guidance, dealers said.

Buying in TSMC shares accelerated as the local main board got a boost from the gains Friday on the U.S. markets, where the Dow Jones Industrial Average closed up 1.74 percent and the S&P 500 index ended 1.09 percent higher amid optimism toward a possible trade deal between the U.S. and China, dealers said.

"TSMC had been lagging behind the broader market in recent sessions so technically, the stock was catching up with the main board today," Dayu International Securities Investment Consultant Co. analyst Chang Chih-cheng said.

"Moreover, the revision of TMSC's first-quarter sales forecast was seen by the market as minor and the company is expected to see better shipments in the second quarter after its production interruption in the first quarter," Chang said.

On Friday, TSMC issued a statement, saying it has cut its sales forecast to between US$7.0 billion and US$7.1 billion from its estimate in mid-January of US$7.3 billion to US$7.4 billion.

The downgrade was due to the production problem in January, which the company said cost it about US$550 million in sales.

The production issue, found to have been caused by problematic raw materials, resulted in low yields of wafers produced on the 12 nanometer and 16nm processes at TSMC's Fab 14B, a 12-inch wafer foundry in Tainan, the company said.

TSMC has also cut its forecast for its first-quarter gross margin by 2.6 percentage points, and its earnings per share by NT$0.42.

TSMC said in the statement that to ensure the quality of its wafers delivered to customers, it has decided to "scrap a higher number of wafers than our earlier estimate."

Foreign brokerages said the Fab 14B incident has affected shipments to major TSMC clients such as U.S.-based integrated circuit designer Nvidia Corp., Chinese IC designer HiSilicon Technologies Co. and Taiwan's MediaTek Inc.

"Nonetheless, many investors are expecting a higher cash dividend from TSMC for 2018, as the company posted a record high net income," Chang said.

For 2018, TSMC reported NT$351.1 billion in net profit and earnings per share of NT$13.54, which gave rise to market expectations of NT$9 in cash dividend per share, compared with NT$8 the previous year.

TSMC has scheduled a board meeting for next week to discuss its cash dividend payout for 2018.

(By Chang Chien-chung and Frances Huang)