Taiwan Semiconductor Manufacturing Co. surged at its highest rate in 19 months after analysts at UBS AG, UOB Kay Hian Research and Nomura Securities Ltd. said an industry glut was easing, and that shipments will improve next quarter.

The local benchmark index TAIEX climbed 143.16, or 1.9 percent, to close at 7,761.71, its biggest advance since Sept. 18. About five stocks rose for every one that declined. Futures due in January advanced 2.2 percent to 7791.

Analysts attributed yesterday’s rally to several factors. Both Dow Jones and NASDAQ closed at a high in overnight trading in the U.S., due to sliding oil prices.

Also, the decline in banking shares, triggered by the Rebar financial crisis, was put to a stop as the renminbi surged to 7.8 against the U.S. dollar.

Taiwan Semiconductor, the world’s biggest supplier of made-to-order chips, gained NT$3.30, or 5 percent, to NT$69.10. That was its steepest jump since Aug. 31, 2005. United Microelectronics Corp., the world’s No. 2, climbed 75 cents, or 3.9 percent, to NT$20.10.

“The worst is over” for chipmakers, said George Wu, who helps manage US$3 billion at Invesco Taiwan Ltd. Demand for chips will be boosted by new gadgets such as game consoles and mobile phones, Wu said.

William Dong, a Taipei-based analyst at UBS, and Rick Hsu at Nomura Securities said semiconductor shipments will improve next quarter, boosted by Microsoft Corp.’s latest operating system.

“There are some signs that the inventory oversupply is easing,” said Jonathan Koh, a Singapore-based analyst at UOB Kay Hian, who has an “overweight” rating on the industry.

Hon Hai Precision, the world’s largest contract electronics manufacturer, added NT$3, or 1.3 percent, to NT$238.50. AU Optronics Corp., the world’s No. 3 maker of flat-panel displays used in computers and televisions, rose NT$1.10, or 2.5 percent, to NT$44.95.

Crude oil for February delivery fell 4 percent to US$51.88 a barrel Thursday in New York, the lowest close since May 27, 2005. It recently traded at US$52.73, down 18 percent from a year ago. Taiwan imports almost all of its crude oil.

Elsewhere, Advanced Semiconductor Engineering Inc. advanced after the Economic Daily News said Carlyle Group has transferred about NT$100 billion to Taiwan in preparation for a cash offer for Advanced Semiconductor shares.

Advanced Semiconductor, the world’s largest chip packaging and testing company, rose NT$1, or 2.7 percent, to NT$37.75.

Carlyle, the biggest U.S. buyout firm, on Nov. 24 said it was in talks to buy Advanced Semiconductor for US$5.7 billion, equivalent to NT$39 per share. It may offer NT$42 a share, the Economic Daily News reported, without citing anyone.

ProMOS Technologies Inc., Taiwan’s second-largest maker of memory chips, gained 50 cents, or 3.9 percent, to NT$13.40. The company expects to begin mass production at a facility in Chongqing, by the third quarter of 2008, the Financial Times reported on its Web site, citing ProMOS Vice President Ben Tseng.

(Related story on Page 11)

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