Taiwan Semi Gains as Q2 Numbers Disappoint

Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) posted weaker than expected second-quarter numbers and softer third-quarter guidance amid signs that smartphone chip demand could be slowing.

TSMC said net profit for the three months ending in June fell 8.6% from the same period last year to T$66.27 billion ($2.19 billion U.S.), missing estimates of T$68.44 billion. Revenue for the quarter fell 3.6% to T$213.86 billion, the company said, although on a U.S. dollar basis that figure rises 3.2% from the same period last year to just over $7 billion.

TSMC says it sees third-quarter revenue of between $8.12 billion and $8.22 billion, a figure that falls short of the market consensus of around $8.6 billion.

Even so, TradingAnalysis.com founder Todd Gordon advises betting on Taiwan Semiconductor ahead of earnings.

Gordon says Taiwan Semiconductor, the largest holding in the popular SMH semiconductor ETF, has a "pretty strong technical position" that makes it well-poised for a rally following its earnings report this Thursday.

While Taiwan Semi is in the middle of an uptrend, as shown in a chart Gordon provided, the trader is particularly interested in a "symmetry" that has also formed.

More specifically, back in late March when Taiwan Semi saw a pullback, it later bounced to new highs. The stock had pulled back from its all-time highs in July, and Gordon believes the trend will repeat itself.

Thursday, the stock took on 38 cents, or 1.1%, to $36.07, in the higher end of a 52-week trading range of $26.64 to $36.92.