TSMC shares jump over 4 pct after strong Q2 results

Thu Jul 30, 2009 9:47pm EDT

TAIPEI, July 31 (Reuters) - Shares of Taiwan's TSMC (2330.TW) jumped more than 4 percent on Friday, a day after the world's biggest contract chipmaker posted better-than-expected second-quarter earnings and third-quarter outlook. Around half an hour into trade, TSMC shares had risen 4.3 percent, or 2.4 points, to T$58.4, pushing the broader electronics sub-index .TELI 1.2 percent higher. TSMC's gain also outperformed the main TAIEX's .TWII 1 percent rise.

"We reiterate our Buy on TSMC shares," Citi semiconductor analyst Andrew Lu said in a report Thursday after TSMC (TSM.N) released its results. [nTP261512]

Citing an improving sales outlook, Citi raised its 2009 and 2010 earnings per share forecasts on TSMC by 24 percent and 8 percent, respectively. Citi's target share price on TSMC is T$66.

Deutsche Bank also expected TSMC to ship more graphics chips using new 40 nanometre technology to Nvidia (NVDA.O) and AMD (AMD.N) in the third quarter, like Citi dismissing recent market fears that TSMC might delay its migration to the advanced process technology.

In the $20 billion chip foundry market, TSMC has been driving process technology to advanced 65-, 45- and 40-nanometre technology as next-generation electronic devices including mobile phones and game consoles require more powerful processors.

The smaller circuitry allows more circuits to be included on a single chip, increasing chip yield per wafer and boosting efficiency.

(US$1=T$32.8)

(Reporting by Baker Li, Editing by Jonathan Hopfner)

((baker.li@thomsonreuters.com; +886 2 2508-0815; Reuters messaging: baker.li.reuters.com@reuters.net))

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