Taiwan Semi, United Micro shares decline after report

Both chipmakers said they haven’t decided on next year’s spending budget. Taiwan Semiconductor, the world’s largest maker of chips designed by other companies, declined 2.3 percent, its biggest drop in two months. United Micro, TSMC’s nearest rival, fell 4.5 percent to its lowest close since 2003.

Investments by Taiwan Semiconductor and United Microelectronics can help investors gauge the outlook for the technology industry as the chipmakers make products that go into computers, mobile phones and consumer electronics. Taiwan’s Economic Daily News today said that United Micro will cut capital spending by 27 percent next year and TSMC by 17 percent.

“A spending cut signals they are bearish on demand,” said Robyn Hsu, who owns Taiwan Semiconductor shares amid the US$152 million he helps manage at Truswell Securities Investment Trust Co. in Taipei. “If demand slows, revenue and profit will also fall.” Hsu expects the companies will cut spending next year.

United Microelectronics, based in Hsinchu, Taiwan, is expected to cut 2008 capital expenditure to US$800 million, the Taipei-based, Chinese-language Economic Daily News reported, without citing anyone. Taiwan Semiconductor will cut spending to US$2.2 billion, according to the report.

“We have not made any decisions on next year’s capex,” said United Microelectronics spokesman Sandy Yen.

The company’s spending for 2007 is still expected to be as much as US$1.2 billion, Yen said, repeating an August forecast.

Taiwan Semiconductor, also based in Hsinchu, hasn’t determined its capital spending plan for next year, said spokesman J.H. Tzeng. The chipmaker said in August that it will spend between US$2.6 billion and US$2.8 billion this year.

The island’s benchmark TAIEX index gained 0.6 percent.

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