TSMC Q2 Lifts Stock 7%; Big Boost in Capex

Reversing a “sell-on-the-news” trend in the contract semiconductor market, Taiwan Semiconductor Manufacturing (TSM) this morning announced results for its Q2 that beat analysts’ estimates for sales and profit, announced a huge jump in projected capital expenditures, and the stock actually rose.

TSM was up 75 cents, or 7.4%, at $10.85, in contrast to declines yesterday in United Microelectronics (UMC), Semiconductor Manufacturing International (SMI) following their earnings, and a decline last week for Chartered Semiconductor Manufacturing (CHRT) following its earnings. Today, SMI, UMC, and CHRT are all up as well.

Revenue in Q2 rose 88% to $2.24 billion, the company reported, a drop of 16% year over year, yielding profit per American Depository Receipt of 14 cents. That compares to analysts’ estimates of $2.164 and 13 cents per share. It’s also just above the high end of the forecast the company gave.

Just as important, gross profit soared to 46.2% from 18.9% in Q1 and 45.6% a year earlier as a result of higher factory utilization.

For Q3, the company forecast revenue of 88 billion to 90 billion in New Taiwan dollars, which is well above the Street estimate of 79.5 billion. And, in a sign that the company is expecting a bigger ramp in business than some might have thought, the company hiked its expectation for capital expenditures this year to $2.3 billion in US dollars from a forecast given back in April for $1.5 billion.