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September 24, 2017

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TSMC shares grow after tumble

TAIPEI -- Shares of Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip foundry, rose yesterday after taking a tumble in the morning as arch-rival Intel Corp. succeeded in securing orders from one of its major customers.

Intel and Altera Corp., a U.S. based designer of processors used in phone-network equipment, jointly announced Tuesday that the two companies will cooperate in moving to 14-nanometer production technology.

Under their partnership deal, Intel will build future versions of chips known as field programmable gate arrays (FPGAs) for Altera, according to a joint statement.

Analysts at Daiwa Securities Co. said Altera's decision to use Intel's 14 nanometer technology programmable chips will have only a limited impact on TSMC in the short-term.

But the Intel Altera deal could signal the start of more intense competition to be faced by TSMC, they believed.

Intel, world's largest semiconductor chip-maker by revenues, is aggressively trying to enter the contract manufacturing arena to counter a slump in its main PC-chip business caused by a shift in consumer demand to smartphones and tablet computers, the analysts said.

At the end of trade, TSMC shares closed at NT$104.5, up 0.97 percent, after falling as low as NT$101 early in the trading session on the Taiwan stock exchange.

The Hsinchu-based company said in a statement filed with the stock exchange earlier yesterday that TSMC remains Altera's primary foundry, supplying a wide array of processors and that TSMC and Altera have reaffirmed their commitment to a long-term partnership.

Entrenched in smartphone business

TSMC also appears firmly entrenched in the smartphone business, receiving US$7 for every smartphone sold globally and US$11 for every tablet regardless of brand, according to a Bloomberg report published yesterday.

The company's ubiquitous presence in the market is because it is the only company with the technology to make the chips used in the latest gadgets, Bloomberg quoted TSMC Chairman Morris Chang as saying.

Such a capability has allowed TSMC to rank at the top of the Bloomberg Riskless Return Ranking in terms of the risk-adjusted returns among the world's top 20 chip makers over the past three years, the report said.

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