Shares of TSMC plunge amid fears over order loss
Central News Agency
2014-07-17 11:41 AM
Taipei, July 17 (CNA) Shares of Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, took a beating Thursday morning amid fears that Qualcomm Inc. will shift orders for chips made on the advanced 16 nanometer process to Samsung Electronics Co. from the Taiwanese firm, dealers said. The current selling also reflected an almost 7 percent plunge in TSMC's American depositary receipts (ADRs) overnight and a net sell by foreign institutional investors in the stock a session earlier, the dealers said. As TSMC is the most heavily weighted stock in the local market, its losses led the bellwether electronics sector and even the broader market to trend lower soon after the local bourse opened, they added. As of 11:13 a.m., shares of TSMC had lost 4.98 percent to NT$124.00 (US$4.13), with 89.97 million shares changing hands. The electronics sub-index was down 1.80 percent at 371.11 points, while the weighted index on the Taiwan Stock Exchange was 0.92 percent lower at 9,397.69 points. In an investor conference held a day earlier, TSMC Chairman Morris Chang said his company's market share in 16nm technology is likely to lag behind its rival in 2015, but he said he has faith that the disadvantage will be reversed with a higher market share in 2016. TSMC is scheduled to kick off mass production of chips made on the 16nm process in the third quarter of next year and the technology is expected to make up only a single-digit percentage of its total sales in the fourth quarter of next year. "Due to Chang's comments on TSMC's 16nm process development next year, many investors tended to conclude that the comments meant TSMC will lose orders placed by Qualcomm to Samsung Electronics Co," Mega International Investment Services Corp. Alex Huang said. "I think many investors simply seized this negative interpretation to unload their TSMC holdings to lock in their recent strong gains," Huang said. Huang said recent selling by foreign institutional investors also scared away investors, along with a 6.85 percent dive in TSMC's ADRs overnight. On Wednesday alone, foreign institutional investors served as net sellers of 12.08 million TSMC shares. "I remain upbeat about TSMC's earnings outlook over the next few years and believe TSMC's lagging behind Samsung in the 16nm process will be short-lived," Huang said. "Foreign investors' selling in the stock was just an investment strategy to sell on high for profits." TSMC's second-quarter results are evidence that the chip maker remains fundamentally healthy, Huang said. In the past three months, TSMC posted NT$2.30 in earnings per share (EPS), compared with NT$1.85 recorded in the first quarter. "The second-quarter EPS beat my brokerage's earlier estimate of NT$2.10. I expect TSMC to achieve about NT$9 in EPS for 2014," Huang said. In 2013, TSMC's EPS stood at NT$7.26. "After today's plunge in TSMC shares, the stock could fall into consolidation mode for a while. But I expect the stock to see strong technical support at around NT$120 on the back of its earnings strength," he said. (By Jackson Chang and Frances Huang)
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