Taiwan Semiconductor Manufacturing Co, the world's largest contract maker of microchips, beat market expectations on Thursday with only a marginal decline in August sales from a record high a year ago.
TSMC's (TSMC) customers began placing new orders for custom-made chips used in devices like new game consoles and videoconferencing mobile phones after they cleared out unwanted inventory at the bottom of a semiconductor sector downturn in the first quarter.
The company's share price has been lacklustre in recent months despite the steady pace of recovery, as cautious investors look ahead to a peak for the highly cyclical company's revenues by the end of this year.
"A lot of people have been calling the end of the cycle," said Nomura Securities analyst Rick Hsu. "I think now is a very good opportunity to buy."
Analysts say there has been no sign yet that clients like ATI Technologies Inc have called off, or delayed, orders even though high oil prices and other economic worries have cast a shadow over pre-Christmas demand for electronics gadgets.
TSMC said August revenues reached T$23.18 billion (US $709 million), down 1 percent from its all-time monthly high of T$23.41 billion a year ago, but up 11.2 percent from T$20.85 billion in July for its sixth straight month-on-month rise.
The company has forecast third-quarter shipments to rise by 14-16 percent from the second quarter, but also expected average selling prices to drop by 1-4 percent, implying a revenue increase of slightly more than 10 percent.
"Due to better-than-expected recovery of customer demand as well as more favourable NT/US exchange rate, we have full confidence that we shall meet our third-quarter guidance," TSMC Chief Financial Officer Lora Ho said in a statement.