Taipei, Aug. 20 (CNA) Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) got a boost in the early Friday morning session from a report that Intel Corp. was setting up a partnership with the Taiwanese firm to outsource its production to TSMC, dealers said.
The stock, however, soon came off its early high as market sentiment remained haunted by worries over the U.S. Federal Reserve’s possible move to downsize its bond purchases, dealers said.
As of 10:47, shares of TSMC had lost 0.89 percent to NT$554.00 (US$19.79) after hitting a high of NT$563.00 on the Taiwan Stock Exchange, where the Taiex, the weighted index, was down 0.17 percent at 16,346.05 after hitting the day’s high of 16,507.11.
Soon after the local equity market opened, TSMC shares attracted strong buying as investors took cues from a Reuters report which said Intel detailed its partnership with TSMC overnight to outsource its production to the Taiwanese manufacturer in a bid to defend its market share against competition from Advanced Micro Devices Inc. and NVidia Inc.
Reuters said Intel will use TSMC’s advanced 5 nanometer and 7nm processes to roll out its Ponte Veechio chip and Alchemist graphics chips.
According to the report, the Ponte Veechio chip’s first major use will be in a supercomputer Intel is producing for the U.S. Department of Energy.
TSMC declined to comment on the report, saying only that Intel is one of its long-term customers.
Mega International Investment Services Corp. analyst Alex Huang said the outsourcing from Intel has been speculated in the market for a long time, and the report simply confirmed it.
“So, TSMC shares as well as the broader market opened higher in a knee-jerk reaction to the report, and soon gave up the initial gains amid rising fears over the Fed’s possible move to scale down its quantitative easing,” Huang said.
While the partnership with Intel represents benefits for the long term, Huang said, TSMC shares could continue to face downward pressure as foreign institutional investors dump liquid large cap stocks, like TSMC, because the U.S. dollar moves higher on the Fed’s tightening.
“It is possible for TSMC to test the 240-day moving average of around NT$549 in a short term before staging a strong rebound,” Huang said.
Source: Focus Taiwan News Channel