Taipei-Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chipmaker, is forecast to suffer a 6 percent-8 percent sequential fall in sales for the first quarter of this year in the wake of the slow-season effect, a U.S.-based brokerage said Monday.
Many investors are watching closely an investor conference scheduled by TSMC for Jan. 18, when the chipmaker will detail its results for the fourth quarter of last year and give its sales guidance for the first quarter, market analysts said.
In a research note, the U.S. brokerage said its forecast of a 6 percent-8 percent drop for the January-March period is higher than an earlier market estimate of about a 10 percent sequential fall, since the booming virtual currency Bitcoin has raised demand for application-specific integrated circuits provided by TSMC.
The securities house said the rising demand for Bitcoin mining applications helped TSMC offset the impact resulting from the slow-season effect in the first quarter, which led the brokerage to come up with a more upbeat sales forecast.
Bitcoin mining is a peer-to-peer computer process used to secure and verify Bitcoin transactions, referring to payments from one user to another in a decentralized market.
Last week, TSMC reported consolidated sales of NT$277.57 billion (US$9.41 billion) in the fourth quarter of last year, not only a record for the company, but also a sequential increase of 10.1 percent.
The brokerage said TSMC is expected to report a 50 percent gross margin for the first quarter.
However, as the global smartphone market is saturated, TSMC's sales for 2018 could be affected, as its chips used in smartphones and related devices account for about 50 percent of the company's total sales, the U.S. brokerage said.
In addition, a stronger Taiwan dollar is likely to cap TSMC's sales for 2018, so the brokerage has decided to maintain a "neutral" recommendation on TSMC shares and a target price of NT$239.00 on the stock. On Monday, shares of TSMC gained 1.27 percent to close at NT$240.00, with 27.45 million shares changing hands on the Taiwan Stock Exchange. The stock served as a driver to the upturn on the broader market, where the weighted index ended up 0.66 percent at 10,956.31 points.
CNA cannot identify the brokerage because media outlets in Taiwan are not allowed to report the names of foreign brokerages when they give price forecasts for specific stocks and fluctuations in the index.
With a TSMC investor conference set to kick off Jan. 18, investors have been paying attention not only to first-quarter sales guidance but also to the progress of the advanced 7-nanometer process and the even more sophisticated 5nm technology, analysts said.
Chips made on TSMC's 7nm and 5nm processes are expected to begin mass production in 2018 and 2020, respectively, a move that will help the chipmaker maintain the lead over its peers.
In 2017, TSMC's consolidated sales rose 3.1 percent from a year earlier to NT$977.45 billion, a record high in the company's history. Analysts said sales for 2018 could top the NT$1 trillion mark.
Source: Focus Taiwan News Channel