TSMC posts record October sales, topping UMC

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TAIPEI, Nov 9 (Reuters) Top contract chip maker TSMC <2330.TW> said on Friday its October sales jumped 18 percent from a year ago to a record, topping smaller rival UMC <2303.TW>, amid stronger demand for chips in computers and consumer gadgets.

TSMC , which has greater economies of scale and a wider customer base than UMC, has sounded an upbeat note for the fourth quarter. But UMC said a weaker mobile phone chip market was likely to take a toll on its business this quarter.

The mixed outlook has largely been priced in and recent weakness in their share prices reflected lingering concerns over the potential impact from the credit crunch on chip demand in early 2008 as both firms sell most of their products to North America.

Riding an upturn, Taiwan Semiconductor Manufacturing Co Ltd (TSMC) had unconsolidated sales of T.73 billion (4 million) last month, marking its fourth straight annual gain and meeting market expectations.

That was higher than T.85 billion a year earlier and up 11 percent from T.496 billion in September, the company said, without giving an explanation.

A TSMC official added that the company left its guidance for the fourth quarter unchanged. (Click [ID:nTP52026 for details) ''We bet the share price won't go anywhere, until the 2008 outlook get clearer,'' BNP Paribas analyst Eric Chen said in a recent note. ''But we are positive on TSMC from longer-view.'' The sales results came as the Taipei stock market closed. TSMC, whose Taipei-listed shares were flat in the past three months, closed up 0.65 percent at T.30 on Friday, outpacing the main TAIEX's <.TWII> 0.37 percent gain.

On the same day, UMC shares slid 0.52 percent to T.25, the lowest in 4-{ years, a day after it posted a 12 percent annual gain in October sales.

Both TSMC and UMC, which supply to major clients such as Texas Instruments Inc and Qualcomm Inc , have said they will cut 2008 capital spending significantly.

Qualcomm, which develops chips for mobile phones, gave disappointing 2008 full-year forecasts on Thursday due to lower-than-expected handset demand and higher litigation-related costs. (Click [nN08264266] for details) On a consolidated basis, TSMC's sales amounted to T1.38 billion in the January-October period, down 3 percent from the year-ago period.

REUTERS BJR GC1217

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