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TSMC shares up despite November sales drop

TAIPEI -- Shares of Taiwan Semiconductor Manufacturing Co. (TSMC) closed higher Wednesday as investors shrugged off a more-than 14-percent month-on-month decline in consolidated sales for November, dealers said.

Buying was sparked after U.S. based programmable logic device provider Xilinx Inc., one of TSMC's major clients, said overnight that it will maintain close business ties with the Taiwanese company, the world's largest contract chipmaker.

Shares of TSMC, the most heavily weighted stock in the local market, rose 0.96 percent to close at NT$105.00 with 24.56 million shares changing hands. The weighted index on the Taiwan Stock Exchange ended down 0.11 percent at 8,433.77.

TSMC shares opened lower in a knee-jerk reaction to the company's November sales report, which said its revenue fell 14.4 percent from October to NT$44.33 billion in the wake of the slow-season effect in the fourth quarter. However, the November figure was up 0.1 percent from a year earlier.

The 14.4-percent month-on-month sales fall was steeper than an about-10 percent drop the market had previously anticipated.

However, bargain hunting followed immediately to push the stock back into positive territory and momentum continued until the end of the session as investors took positive leads from Xilinx, the dealers said.

In an annual news conference held a day earlier, Tang Liren, chief executive officer of Xilinx Asia Pacific, told reporters that his company has no plans to add any new suppliers and expects its business relationship with TSMC to continue for the long term.

Tang's comments offset the impact of the worse-than-expected November sales data released by TSMC, as investors remained upbeat about the chipmaker's earnings outlook on large orders from its major clients, like Xilinx, after the current inventory adjustments, the dealers said.

Tang said TSMC is scheduled to churn out 20 nanometer chips for Xilinx at its 12-inch wafer plant located in Tainan, starting from the first half of next year.

Judging from the sales of NT$96.13 billion during the October-November period, some market analysts forecast that the chipmaker will only meet the lower end of its fourth-quarter target range of NT$114 billion-NT$147 billion, if it can hit the target at all.

Other analysts said TSMC is expected to see a strong rebound in sales in the second quarter of next year after inventory adjustments in the fourth quarter and first quarter.

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