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Technology Stocks : Taiwan Semiconductor (NYSE: TSM) -- Ignore unavailable to you. Want to Upgrade?

To: Rich23241 who wrote (588)	6/9/2000 9:37:00 PM
From: Allen champ	Read Replies (1) \| Respond to of 684

from Investyourself.com Chips Ahoy The semiconductor sector is poised for a rebound, industry fundamentals have never been better. In fact the fundamentals have been great for quite some time. The question that comes to mind is- if the fundamentals were so great then why have the chip stocks tanked lately? Good question! Chalk it up to the "Green Machine" and investor jitters and not the underlying sector fundamentals. I know it seems as though I am stating the obvious, because just about every other high flyer has been clipped as well. It's true that the overall market took a dump, but some of the recently departed high flyers are not coming back. The "cowpoop.coms" have been minimized to an inscription in time that bookmark the speculative excesses that permeated the market. In this space we hope to separate the wheat from the chaff. In the coming weeks we will focus on companies that represent great values based on fundamentals, industry outlook and PE to growth ratios. With out further ado, we present our first company in the series. Taiwan Semiconductor Mfg. Profile > biz.yahoo.com <{TSM} the worlds largest chip foundry, is sporting very attractive valuation numbers (see TSM profile) and the chip sector has a bright outlook (next week we will do a feature story on just how bright). Founded in 1987 as the first contract manufacturer dedicated solely to integrated circuit production, Taiwan Semiconductor Manufacturing is the largest player in the fast growing chip foundry business. Founder and chairman Morris Chang, who had spent three decades as an executive in the U.S., built the enterprise on the notion that Taiwan had a large pool of engineers with good basic skills who could be globally competitive in chip production. By focusing on production rather than on circuit design, TSM developed first-rate manufacturing capabilities, and by 1999 had boosted sales to $2.26 billion. Fabrication processes offered by the company include CMOS logic, mixed-signal, volatile and nonvolatile memory, and BiCMOS. TSM is based in Taiwan's "Silicon Valley," Hsin-Chu Science-Based Industrial Park. Facilities include five 8-inch wafer fabrication plants, or "fabs," and two 6-inch wafer fabs. In addition, the company is ramping production at another fab, has begun construction on a joint-venture fab in Singapore with Philips Semiconductor, and is building two new 12-inch fabs (scheduled to open early in 2002). In light of a strong cyclical rebound in chip demand that began in early 1999, the company has also sought to add capacity through acquisitions. In June 1999, TSM acquired a 30% interest in Acer Semiconductor Manufacturing Inc., and formed the TSMC-Acer foundry fab. In late 1999, the company announced plans to acquire the remaining 70% interest in TSMC-Acer. In January 2000, TSM agreed to acquire Worldwide Semiconductor Manufacturing Corp. Altogether, the company is ambitiously seeking to expand production capacity from 1.9 million 8-inch equivalent wafers in 1999, to 3.4 million in 2000, with further expansion to about 4.7 million for 2001. TSM was using all its capacity in the 1999 fourth quarter, in contrast to a capacity utilization rate of 68% in the 1998 period, reflecting a decisive upturn in global demand for chips. The company expects its fabs to continue to run flat out at least into 2001. End markets for the company's chips include computers (40% of 1999 fourth quarter sales), communications (33%), consumer (16%), industrial/other (4%), and memory (7%). TSM serves a variety of customers, effectively working as a partner in the production end of the business. Nearly two-thirds of the company's sales are made to fabless design houses that rely on chip foundries for production; the remainder of sales comes from integrated device manufacturers. TSM has made progress in diversifying its customer base in recent years. In 1999, 36 clients accounted for 80% of sales, up from 31 customers in 1998 and 24 in 1997. The bottom line is that the chip sector is hot, worldwide semiconductor revenues should exceed $210 billion, up from $125.6 billion in 1998. Growth will be fueled by factors including the proliferation of the Internet, and the increasing content of semiconductors in electronic equipment, appliances, cellular phones and automobiles. In this blazing sector TSM offers growth at a reasonable price.