Taiwan Semiconductor Adjusts Guidance Up

| About: Taiwan Semiconductor (TSM)
This article is now exclusive for PRO subscribers.

This is not a misprint. On Tuesday March 10, 2009, Taiwan Semiconductor Manufacturing Co., Ltd. (NYSE:TSM) sharply raised its 1st-quarter sales and margin forecasts due to rush orders from China.

Here is the direct quote from TSMC CFO Lora Ho:

"TSMC's first-quarter business is expected to be better than the company's previous guidance ... primarily due to rush orders from customers, especially from the mainland Chinese market, and a stronger U.S. dollar..."

Did we just see the word "rush" and the word "orders" used in the same sentence? It would appear so.

What is happening here is that inventories have been taken so low, chip makers are waiting until they have actual orders instead of order expectations. The recovery, if it looks like this, could be more of V-shaped recovery after all.

I am not ready to call a recovery in chips just yet. TSM now expects first-quarter sales to reach NT$36 billion-to-NT$38 billion, better than an estimate of NT$32 billion-to-NT$35 billion made in January, but still lower than the 4th quarter's T$64.6 billion.