Taipei--An Asian brokerage has raised its target price on contract chip maker Taiwan Semiconductor Manufacturing Co. (TSMC, ???) to more than NT$240 (US$7.89), citing the company's strong lead in the global market.
Like other foreign brokerages, the Asian securities house said it was optimistic about TSMC's shipments, as the company is the supplier of A11 chips for Apple Inc.'s new iPhones that are expected to be launched in September.
Meanwhile TSMC is scheduled to go ex-dividend on June 26, with the reference for its opening share price dropping by NT$7, which is its dividend per share on its 2016 earnings.
Some investors are likely to wait for TSMC's share price to bounce back, while others might pocket their gains, according to market analysts.
In a research note, the Asian brokerage has upgraded its target price on TSMC shares about 17.4 percent to NT$242.
CNA cannot identify the brokerage because media outlets in Taiwan are not allowed to do so when price forecasts are made for specific stocks.
On Friday, shares of TSMC, the most heavily weighted stock in the local equity market, closed down 0.46 percent at NT$217.00 amid profit taking.
In the past six trading sessions, the stock rose NT$9 or 4.32 percent on buying by local proprietary brokerages that were betting on a higher price after the ex-dividend date.
The Asian brokerage said TSMC's market position is hard to be challenged as the company holds more than a 50 percent share of the global pure wafer foundry market.
"We see no worthy contender to TSMC's market position in the near future," the brokerage said. "Extortionate barriers in finance and technology keep contenders at bay, in our view."
The brokerage said few other companies would be able to match the TSMC's massive research and development spending over the years.
"By the same token, we do not believe it is possible to threaten TSMC's market share without such intense spending," it said.
According to advisory firm IC Insights, TSMC's R&D spending for 2016 was US$2.22 billion, up 7 percent from a year earlier.
Meanwhile, shipments of chips made on TSMC's advanced 10 nanometer process are expected to soar to between 55,000 units and 60,000 units per month in the fourth quarter of this year, on its A11 processor supply to Apple, according to the Asian brokerage.
In addition to TSMC, other nine stocks will go ex-dividend on June 26, which is likely to result in a drop of 62.7 points on the Taiwan Stock Exchange from the previous closing level, the exchange said.
On Friday, the weighted index closed down 0.21 percent at 10,377.70 points.
Source: Focus Taiwan News Channel