Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, is likely to see a 6 to 8 percent sequential decline in sales in the first quarter of this year amid a slow season, a US-based brokerage said yesterday.

Many investors are waiting for an investors’ conference scheduled by TSMC for Thursday, when the chipmaker would detail its results for the fourth quarter of last year and give its sales guidance for the first quarter, market analysts said.

In a research note, the US brokerage said its forecast of a sales decline for the first quarter is higher than an earlier market estimate of about a 10 percent sequential fall.

The rising demand for bitcoin mining applications helped TSMC dampen the effects of the slow season in the first quarter, which has caused the brokerage to update its sales forecast to a more optimistic one, it said.

Bitcoin mining is a peer-to-peer computer process used to secure and verify bitcoin transactions, referring to payments from one user to another in a decentralized market.

TSMC last week reported consolidated sales of NT$277.57 billion (US$9.4 billion) for the fourth quarter of last year, a sequential increase of 10.1 percent and a record high for the company.

TSMC is expected to report 50 percent gross margin for the first quarter, the brokerage said.

However, as the global smartphone market is saturated, TSMC’s sales this year could be affected, as its chips used in smartphones and related devices account for about 50 percent of the company’s total sales, it said.

A stronger New Taiwan dollar is also likely to cap TSMC’s sales this year, so the brokerage has decided to maintain a “neutral” recommendation on TSMC shares and a target price of NT$239.

Shares of TSMC yesterday gained 1.27 percent to close at NT$240 on the Taiwan Stock Exchange.

Investors would be paying attention to the first-quarter sales guidance, and the progress of the advanced 7-nanometer process and the more sophisticated 5-nanometer technology, analysts said.

By: DocMemory
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