Taiwan stocks up, major chip makers lead rise

Taiwan stocks rose 0.56 percent on Tuesday as investors snatched up big microchip makers like UMC as they reconsidered a recent correction in index heavyweights but cashed out of other tech issues. The TAIEX share index added 35.61 points to close at 6,343.54, with contract microchip maker United Microelectronics Corp (UMC) topping the active list with a 4.93 percent surge to T$21.30.
Tech heavyweights had taken a hit after UMC's larger rival Taiwan Semiconductor Manufacturing Co (TSMC) gave an unexpectedly weak forecast last week for third-quarter prices, taking some of the gloss off the sector's strong outlook.
"The impact from TSMC's negative news is fading," said Albert Lin, research chief at Hotung Securities. "Its share price fell but didn't continue to break out lower, and it seems selling pressure has eased." TSMC added 3.0 percent to end at T$54.90.
Taiwan's largest memory chip maker, Powerchip Semiconductor Corp, gained 3.38 percent to T$24.50 ahead of reporting second-quarter earnings later on Tuesday.
But investors took profits on other technology plays, with the high-flying microchip design sector suffering a big hit.
Mediatek Inc, the world's largest designer of DVD chips, lost 3.4 percent to close at T$326.50. The issue remains up 51 percent since the beginning of the year, compared with an 3.3 percent gain in the TAIEX.
World-wide chip sales in June rose 0.8 percent from a year ago but fell 0.5 percent from May due to inventory adjustments, the Semiconductor Industry Association said on Monday.
It said sales are up 6.5 percent for the first half of 2005 and forecast the strongest growth for the year to occur in the second half.
Domestic money also flowed out of small-capitalisation tech shares after the stock exchange said it would downgrade component maker Xepex Electronics to a full-delivery stock after the company bounced a T$57 million cheque.
Overall turnover was moderate at T$89.5 billion, up from the last session's T$77.04 billion but well below T$127.8 billion on Friday as investors awaited more quarterly earnings reports for cues on whether the tech sector's improving fundamentals justify strong valuations.
The over-the-counter market's TAISDAQ index fell 0.77 percent to end at 127.52, while August TAIEX index futures rose 0.68 percent to 6,340.