Chips are down as TSCM stumbles

CHIPMAKERS across Asia were hammered today after Taiwan Semiconductor Manufacturing the world's largest contract maker of semiconductors, missed its profits forecast and warned of further gloom.

The news heaped more pressure on Japanese stocks, sending the benchmark Nikkei 225 tumbling 3.4% or 338.88 to 9591.03, cementing a two-week dive of some 10%.

TSCM shares slumped 7% - its daily trading limit - after it unveiled disappointing earnings for the second quarter to end-June and slashed its spending budget for the rest of the year.

Industry analysts were shocked by TSCM's earnings of T$0.49 per share, against a consensus forecast of T$0.56, and chairman Morris Chang's warning that chip prices would fall 5% this quarter, wiping out hopes that the company would make money in the three months to September.

Taiwan's Weighted Average tumbled 3.76%, or 189.73 points to 4855.34.

The implications of TSCM's results set off a domino effect in Asian technology stocks. South Korea's Kospi index slumped below 700 for the first time since January with a 3.6% tumble to 697.44, led by Samsung Electronics, the world's mainstream chip leader, which lost more than 5%.

A similar fall in Singapore-listed Chartered Semiconductor took the Straits Times index down 23.53 points to 1492.88.

In Tokyo, the worst carnage was among suppliers of chipmaking equipment, with Advantest and Tokyo Electron down by as much as 10%. Even a fall in the value of the yen failed to rescue Japanese stocks, as the benefits of a weaker currency to exporters were countered by concern that the fall reflected the country's worsening economic outlook.

A rare gainer in Tokyo was Sony, up 0.5% after it yesterday reported strong first-quarter earnings, boosted by big boxoffice takings for Spider-Man and rising demand for games for its PlayStation2 console.

Domestic economy stocks were punished by a further fall in Tokyo's consumer price index, which slipped 0.9% in June, prolonging Japan's deflationary spiral.

Hong Kong's Hang Seng index plunged 139.08 points to 9745.70 while shares in recently-listed Bank of China Hong Kong continued to retreat. After touching HK$8 in early trades, support from the issuing bankers pulled the stock back to HK$8.10, against an offer price of HK$8.50.

A drop in US consumer durable purchases in June hurt Hong Kong export traders, while the technology shake-out saw shares of leading mobile phone operators slide by up to 4.5%.

Heavy institutional selling sent Sydney shares tumbling and the All Ordinaries index lost 49.50 to 2941.10.

News Corp headed for its 1998 low, with a fall of more than 3%, while bank shares bore the brunt of professional selling. Resource stocks were also hit as the prospects of a global recovery appeared to recede and mining group BHP Billiton was off almost 2%.

In Malaysia, the Kuala Lumpur Composite index nudged 0.29 points higher to 719.14 after it appeared on a number of brokers' recommendations. Similar buy signals for Thailand and Indonesia had the opposite effect, with Bangkok's SET index down 6.24 points to 368.20 and the Jakarta Composite index 9.23 points lower at 443.93.

Prices and indices in this section are supplied from various sources and calculated at different times and may not always match those listed in the tables.