Top contract microchip maker TSMC reported on Tuesday that sales had risen for a fifth month in a row in July, and analysts said momentum would pick up as new 3G phones and video-game consoles hit the market.
TSMC's chief competitor, United Microelectronics Corp (UMC), said its July sales rose 7 percent from June - a third straight monthly rise - but fell 36.9 percent from a year ago to T$7.065 billion.
While Taiwan Semiconductor Manufacturing Co's (TSMC) July sales were off 9.9 percent from the same month in 2004, the 3.7 percent rise from June indicated excess inventories of the first half of 2005 were gone.
"TSMC's month-on-month rise was only 3.7 percent this time, which is a little bit slow but still acceptable to the market," said KGI Securities analyst Tiffany Chen.
"Momentum will continue to be up in August and September," said Chen, who expected 5-10 percent month-on-month increases for both firms over the remainder of the third quarter.
TSMC's clients include ATI Technologies Inc, which supplies graphics chips for Microsoft Corp's Xbox 360 console, scheduled to hit stores in time for the holiday shopping season this year.
Both TSMC and UMC have also said chips for third generation (3G) handsets would also be part of a broad recovery in the third quarter.
TSMC's July revenues reached T$20.85 billion (US$654 million), compared with T$23.15 billion in the same month last year and up from T$20.105 billion in June.
The company said last month it expected third-quarter shipments to jump 14-16 percent from the second quarter, but deflated the market's high expectations a little by saying average selling prices would be down by 3-5 percent.
Its share price has fallen 4.7 percent since making the announcement on July 26, while UMC shares gained 2.0 percent over the same period.
UMC had forecast third-quarter prices to rise by a single-digit percentage, and also reported a higher proportion of revenue coming from its high-profit, top-of-the-line technology using 90 nanometre circuits, stealing some thunder from TSMC.
UMC and TSMC, which is 16.6 percent owned by Dutch electronics giant Philips Electronics NV, announced their July sales after the close of stock market trade in Taipei.
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