TSMC soars as investors focus on pricey smartphone outlook

Bloomberg

Taiwan Semiconductor Manufacturing Co. climbed the most in almost three years as investors focussed on its prediction that the outlook for high-priced devices would be strong in the second half.
Shares in the world’s largest contract chipmaker rose 5.8 percent to NT$237.50 in Taipei. Executives said they expected demand for premium devices — such as Apple Inc.’s iPhone — to help offset crypto-sector lassitude in the second half.
Nomura upgraded the company to a buy from neutral after its results, citing an improved 2019 picture as TSMC continues to move up the technology ladder.
“After experiencing a weak smartphone market in 1H18, TSMC is now seeing recovering demand in this segment,” George Chang and Angela Huang, analysts with Yuanta Investment Consulting, wrote in a report. “But management also says the pace of recovery, especially for low-end phones will be slow. One good thing for smartphones is that growing 5G demand will likely fuel the next wave of smartphones, leading to content upgrades and unit increases.”
Investors looked past a reduced revenue outlook for Taiwan’s largest company. A bellwether for the chip industry as well as an early indicator of iPhone demand, it heads into its busiest quarters grappling with waning enthusiasm for the high-powered chips used to mine digital currencies.
TSMC also reduced its capital spending outlay for the year, to $10 billion to $10.5 billion from as much as $12 billion previously, signalling a slower pace of investment in technology and capacity expansion.
Apple, TSMC’s biggest customer, typically unveils its latest phones in September. TSMC reported that net income rose 9.1 percent to $2.4 billion in the second quarter, in line with estimates.