* May sales were biggest monthly sales in 7 months
* Analysts say on track to meet Q2 target, but T$ a concern
* TSMC chairman says worst for semi market is over
* TSMC, UMC shares outpace big board
(Recasts with comments and graphics)
By Baker Li
TAIPEI, June 10 TSMC (2330.TW) (TSM.N), the
world's top contract chip maker, booked its biggest monthly sales
in seven months thanks to a pick-up in demand for chips used in
computers and other consumer gagdets.
TSMC's May sales still fell from a year earlier but analysts
say the result was in line with their expectations and TSMC was
on track to meet its second-quarter sales target, even though a
strong Taiwan dollar threatens to hurt its profit margins.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC) had
unconsolidated sales of T$24.47 billion ($748 million) last
month, down 15.6 percent from a year ago. But that was up 12.6
percent from April, its third straight month-on-month rise.
Similarly, cross-town smaller rival UMC (2303.TW) (UMC.N) saw
its May sales rising 9.3 percent from April. Both TSMC and UMC
have benefitted from strong demand from China recently.
At its annual shareholders' meeting earlier on Wednesday,
TSMC Chairman Morris Chang showed his confidence in the recovery.
"The worst for the semiconductor market has gone," Chang said.
"The second quarter is much better than the first quarter."
Chang said the U.S. economy could start recovering from the
fourth quarter this year but he reiterated that sales of the
global semiconductor market were likely to grow 5-6 percent
annually in the next few years.
TSMC has said it expects its second-quarter sales to rise to
between T$71 billion and T$74 billion from the first quarter's
T$39.5 billion, with gross profit margin reaching 43.5-45.5
percent in the same quarter. [ID:nTP343810]
"In terms of wafer-in, momentum remains strong and there is
very little sign of a slowdown, which suggests little downside
risk for the 3Q business," Macquarie Research analyst Warren Lau
said in a report published in late May.
But he said the recent strength of the Taiwan dollar against
the U.S. dollar was a negative factor for TSMC.
Investors chased TSMC shares on Wednesday before the company
released the sales results. TSMC shares rose 3.74 percent and UMC
shares jumped 2.82 percent, outperforming the main TAIEX's 0.75
On a consolidated basis, TSMC's sales totalled T$87.2 billion
in the first five months of the year, down 40 percent from a year
ago, the company said in a statement.
For a graphic on TSMC's monthly sales, click here
For a graphic on TSMC and UMC's combined sales, click here
(Editing by Jacqueline Wong)