UPDATE 1-TSMC posts small rise in Oct sales; '10 seen rosy
* Higher capex likely to boost sales, profits next year
* Stock up 0.8 pct before sales results, outpacing TAIEX
(Adds details)
By Baker Li
TAIPEI, Nov 10 (Reuters) - October sales at top contract chipmaker TSMC (2330.TW) were almost flat amid weaker tech demand but the firm could further boost its capital spending on advanced technology to help book record sales next year.
New technologies help boost output of advanced chips with fatter margins and cut costs, paving the way for TSMC (TSM.N) to win more orders from clients who are stepping up outsourcing to cut manufacturing expenses.
In late October, TSMC Chairman Morris Chang said he expected his company to post record sales and profit next year. TSMC has raised its 2009 capital spending by 17 percent to $2.7 billion and analysts expect its capex to break $3 billion next year.
That was much higher than smaller cross-town rival UMC's (2303.TW) budget of $500 million for this year. [ID:nTP163864] [ID:nTP112950]
"Confidence on a record year in 2010 are interesting first signals that our top of consensus, 29 percent year on year revenue growth estimate for TSMC in 2010 is realistic," CLSA said in a recent report.
"The upcycle is well in progress and TSMC's position within the space remains impregnable."
TSMC's sales could rise to T$356 billion ($11 billion) in 2010 from an estimated T$293 billion for 2009, according to a consensus forecast by Thomson Reuters I/B/E/S. Unconsolidated sales at Taiwan Semiconductor Manufacturing Co Ltd (TSMC) reached T$29.18 billion last month, up 2.9 percent from a year ago and a 4 percent rise from September, the company said in a statement.
The result came after the Taipei stock market closed. TSMC shares gained 0.83 percent, outperforming the main TAIEX's 0.75 percent rise. UMC shares lost 0.64 percent.
(For TSMC and UMC's combined monthly sales, click: here)
Still, some analysts say price competition could intensify as UMC and other smaller rivals strive to gain a bigger share of the $20 billion chip foundry market.
On a consolidated basis, TSMC's sales totaled T$234 billion in January-October, down 21.5 percent from the same period a year ago.
A day ago, UMC (UMC.N) saw its October sales rise 18 percent from a year ago but the result fell from a two-year high reached in September. [ID:nTP301633] (US$1=T$32.3) (Editing by Jonathan Hopfner)
