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TSMC to see 20% growth in Q2: Nomura Securities

TAIPEI, Taiwan -- Nomura Securities (野村證卷) yesterday stated that TSMC's (台積電) second-quarter performance may grow as much as 20 percent, exceeding the 15 percent expected by the market, while raising the company's target share price from NT$123 to NT$129, ahead of the company's earnings conference scheduled this Thursday.

According to Nomorua Securities, TSMC is at the forefront of a spirited rebound for the global semiconductor industry, with tremendous long-term growth momentum. From a top to bottom perspective, inventory levels across the global semiconductor supply chain are still residing at relatively low basis points at around 57 to 58 days of inventory, a figure lower than last year's average of 60 days in the same period, said Nomura Securities, adding that growth in pull-in orders has been observed throughout the sector recently.

From a bottom-to-top perspective, Nomura Securities stated that signs of strong demand are showing through their visit to numerous end product manufacturers. TSMC is poised to benefit from rising demand for its fabrication services by strong growth in system on chip (SoC) products that are compatible with China's upcoming long-term evolution (LTE) mobile broadband network, the exuberant market reception for the Sony's latest Playstation 4 gaming console and wireless connectivity chips equipped on wearable devices, said Nomura Securities, adding that TSMC's revenues will be padded from an across the board upgrade in hardware specifications among China's smartphone makers.

TSMC Continues Lead in Advanced Process Technology

Most notably, Nomura Security stated that TSMC continues to maintain its commanding lead in the 28 nm and 20 nm fabrication technology.

Meanwhile, Lu Hsing-chi (陸行之), lead analyst of Asia's semiconductor sector at Barclays PLC, stated that TSMC's first-quarter earnings-per-share performance is expected to reach NT$1.75, while predicting the company's production capacity for 28 nm and 20 nm high-k metal gate (HKMG) fabrication process technology to hit 100 percent in the second quarter and contribute revenues growth between 14 and 18 percent. In addition, Lu outlined a number of queries he intends to ask TSMC during Thursday's earnings conference, including the company's views on revenues contribution prospects of new applications such as heart beat and fingerprint sensors, and smart watches and glasses, and whether the company will increase its revenue growth prospects for 2014 to 20 percent.

Analysts of the Macquarie Group boldly stated that from the beginning of the current quarter to the end of 2015, TSMC is expected to yield quarterly earnings of NT$2 per share, while foretelling of a tremendous boom for the global semiconductor sector.

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