Bank of America Tells Clients to Buy Shares of Seven Semiconductor. This explains why Chartered was up as one of them

Taiwan Semiconductor Manufacturing Co. and United Microelectronics Corp. were among the seven semiconductor makers raised to “buy” by Bank of America Corp. on the prospect the stocks will rally in 2010 on stronger demand for electronics.

The shares are cheap after tumbling last year and are poised to gain in the next 12 months as the recession ends and sales rebound, wrote analyst Daniel Heyler in a research report. Revenue at chip producers will likely grow more than 40 percent in 2010, he said.

“The industry is far healthier due to far fewer players and lower capital spending,” Heyler said. “This should enable the sector to recover as demand recovers.”

The Philadelphia Semiconductor Index plunged 48 percent in 2008, its worst year on record, as the economy shrank and the biggest financial crisis since the Great Depression forced investors to raise cash. In five months, the economy will start growing as government policies spur spending, according to the median economist estimate from a Bloomberg poll.

Taiwan Semiconductor, the world’s largest custom-chip maker, was raised to “buy” from “neutral,” while United Microelectronics, the second biggest, was lifted to “buy” from “underperform.”

The Hong Kong-based analyst also boosted his rating on Chipbond Technology Corp., ASM Pacific Technology Ltd. and Kinsus Interconnect Technology Corp., to “buy” from “underperform.”

He also lifted Chartered Semiconductor Manufacturing Ltd. and Advanced Semiconductor Engineering Inc. to “buy” from “neutral” and increased his recommendation on Semiconductor Manufacturing International Corp. to “neutral” from “underperform.”

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