SAN FRANCISCO – Semiconductor stocks rose on Monday after Taiwan Semiconductor Manufacturing Co., the world's biggest contract chipmaker, raised its 2001 financial forecasts and Intel Corp. announced new technology that helps to extend Moore's Law into the next decade.
Taiwan Semiconductor Manufacturing Co. (TSMC) increased its 2001 pretax profit forecast by 55 percent to T$9.35 billion from an earlier projection of T$6.04 billion, citing a ''substantial increase of customer orders.'' The raised forecast comes two months after TSMC trimmed estimates amid the worst-ever downturn in the chip industry.
Intel helped boost chip stocks when it said it had devised a new structure for transistors -- the tiny switches that make up semiconductors -- that could lead to microprocessors that run at blazing speeds and consume less power than conventional ones.
"There's some legitimacy to the positive sentiment, with incremental news out of Intel and TSMC," said Needham & Co. semiconductor analyst Dan Scovel. "Those are nice little things from a macro perspective."
The Philadelphia Semiconductor Index, a proxy for the sector, rose 21.16, or 4.1 percent to 532.46, its third straight day of gains after five losing sessions in a row. The index on Monday also broke through a resistance level of about 490. The index has plunged from a record high of 1,362.10 on March 14, 2000, shortly before the industry entered the current downturn.
"We're trying to establish a healthy platform" at these levels, Scovel said.
Shares of Intel, the world's biggest chipmaker, rose 81 cents to $31.78 and was the second most actively traded stock on the Nasdaq, after Cisco Systems Inc.
ESS Technology Gives Boost
Chip stocks also got a boost from ESS Technology Inc., which makes microchips that power DVD players. The Fremont, California-based company raised its fourth-quarter earnings forecast on Monday, buoyed by increasing market share and better-than-expected sales of DVD players.
The company's stock price surged $3.69, or 22.9 percent, to $19.79 on Nasdaq. The shares have more than tripled this year as sales of DVDs and players are breaking records as the new technology's popularity approaches that of videotapes.
Shares of ESS Technology competitor Zoran Corp. rose in sympathy, gaining $1.87, or 5.7 percent, to $34.43. Zoran said in October that it expects a seasonally strong fourth quarter with revenue growth of 10 percent to 15 percent from the $30 million it had in the third quarter.
Semiconductor imaging device maker Omnivision Technologies Inc. soared $2.02, or 55 percent, to $5.68, after Prudential Securities analyst Tristan Gerra raised his rating on the stock to "buy" from "hold," citing a bright outlook in wireless handsets and security applications.
Chip equipment stocks also gained.
Applied Materials Inc., the biggest maker of chip-manufacturing equipment, rose $1.30 to $40.06, KLA-Tencor Corp. added $2.42 to $50.05, Novellus Systems Inc. rose $2.24 to $39.18 and Lam Research Corp. rose $1.35 to $22.51.