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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (6543)	7/23/2003 5:14:17 PM
From: Math Junkie	Respond to of 25522

I think you did a good job of presenting a bear case.

To: Gottfried who wrote (6543)	7/23/2003 10:02:30 PM
From: Proud_Infidel	Respond to of 25522

RPT-Solid Q2 profit seen for TSMC, UMC; slowdown looms Wednesday July 23, 9:59 pm ET By Michael Kramer (Repeats results preview article sent on July 22) TAIPEI, July 22 (Reuters) - The world's largest contract microchip maker, TSMC (Taiwan:2330.TW - News), is expected to report on Thursday its best quarterly profit in two years on strong chip sales for new gadgets, but analysts fear a slowdown later this year. Its rival UMC (Taiwan:2303.TW - News), the world's second-largest chip maker, is expected to report a sharp jump in second quarter profits from near-breakeven in the first quarter, but is seen more vulnerable to any potential slowdown. While powerful chips for computer graphics and mobile phones are moving down the production pipeline, demand for the finished products from consumers and firms is still in doubt, analysts say. "There is no clear picture emerging on end-demand," said Deutsche Securities analyst Kishore Suratkal. "Companies continue to manufacture and hope for the best." Taiwan Semiconductor Manufacturing Co (TSMC) (NYSE:TSM - News) and United Microelectronics Corp (UMC) (NYSE:UMC - News) may caution investors that growth is slowing in the July-September period after the second quarter spurt, analysts say. UMC is set to release second quarter profits on July 30. TSMC, the world's largest made-to-order microchip maker, is expected to post earnings per share of T$0.54 for the April-June quarter, more than double the first quarter earnings and up 10.2 percent from a year earlier, a Reuters survey of six analysts found. It would be its highest earnings since first quarter of 2001 -- when the industry started its slump. TSMC saw better profit margins in the second quarter as it won more high-priced premium orders due to better progress on shrinking circuits to 0.13 microns from 0.15 to 0.18 microns. "The broad industry adoption of TSMC's 0.13 micron process should continue to accelerate," said Merrill Lynch analyst Dan Heyler. Its closest rival, UMC, is expected to earn T$0.17 per share, also its best showing since early 2001, excluding a jump in earnings in the second quarter of 2002, which turned out to be a false dawn for the sector. This compared with earnings in the first quarter of 2003 of T$0.03 per share and earnings of T$0.30 in second quarter of 2002. CINEMATIC GRAPHICS CHIP The earnings were boosted by clients like Motorola Inc (NYSE:MOT - News) and Texas Instruments (NYSE:TXN - News), which placed orders for chips to power mobile phones capable of handling complex data like digital photos. TSMC's largest customer, Nvidia Corp (NasdaqNM:NVDA - News), also launched a much-anticipated chip capable of powering near-cinematic graphics in computer games. These cutting-edge products require the latest in manufacturing processes, in which TSMC excels and for which it can charge premium prices, lifting profit margins. Singapore's Chartered Semiconductor Manufacturing Ltd (NasdaqNM:CHRT - News; SES:CSMF.SI - News), the sector's fourth-largest player, after IBM's contract chip making arm, posted last week a better-than-expected second-quarter loss of US$90 million. Despite expectations of a third-quarter slowdown, analysts said they do not expect a replay of the sudden revenue slump in last year's third quarter, when overly optimistic orders by customers turned into a pileup of unsold inventory. However, Merrill's Heyler said: "We expect guidance could come up light relative to the Street's expectations." Heyler nonetheless expected TSMC to forecast about 10 percent quarter-on-quarter revenue growth for the July-September period, and a three to six percent rise for UMC. Analysts say most of the sector's recovery has already been reflected in the UMC share price, and they will need to give evidence of a second wind later in the year to advance further. TSMC shares have powered 53 percent higher from a February 12 pre-Iraq war low to close at T$57 on Monday, leading many analysts to cut their ratings to "neutral" in recent weeks. UMC has risen 30 percent over the same period, while the Philadelphia stock exchange index of U.S. semiconductor shares (Philadelphia:^SOXX - News) rose 30.4 percent. "I think the fourth quarter will be the key factor to watch to see if it can break out," said ABM-AMRO analyst Leo Li, who has a T$67 price target for TSMC but expects it to remain trapped around T$60 for the time being.