Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

TSMC's shares slide nearly 7% in Taipei on global chip outlook concerns

Published 04/18/2024, 09:06 PM
Updated 04/19/2024, 02:25 AM
© Reuters. A smartphone with a displayed TSMC (Taiwan Semiconductor Manufacturing Company) logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

TAIPEI (Reuters) -TSMC's Taipei-listed shares tumbled 6.7% on Friday following the company's first-quarter earnings report in which it dialled back its expectations for chip sector growth and did not revise up its capital spending plans, contrary to expectations.

Taiwan Semiconductor Manufacturing Co (TSMC), the world's largest contract chipmaker, forecast second-quarter sales may rise as much as 30% as it rides a wave of demand chips used in artificial intelligence (AI) applications. Its first-quarter profit also beat estimates.

But it left its capital spending plans for this year unchanged at between $28 billion and $32 billion and reiterated it expected 2024 revenue to rise in the low- to mid-20% range in U.S. dollar terms.

It lowered its outlook for the global semiconductor industry excluding memory to a growth rate of around 10% from a previous forecast of more than 10%.

TSMC, a major supplier to Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA), also downgraded its growth forecast for the global foundry sector to a mid-to-high teens percentage gain from a previous projection of around 20%.

Allen Huang, vice president of Mega International Investment in Taipei, said the market was reacting to the revised outlook for the semiconductor industry, adding that TSMC had been expected to increase capital expenditure this year for high-end packaging.

"If capital expenditure was only maintained at the previous level, it means that profit is not as expected," he said.

Another Taiwan fund manager, who asked not to be identified, said given TSMC's recent stock rally investors had high expectations heading into first-quarter earnings.

"Its capex has not been so aggressive, and the percentage of advanced process technologies revenue compared to overall revenue is still pretty low," the manager said.

TSMC's poor share price performance dragged on the broader Taipei market which closed down 3.8%, losing 774 points - the most it has lost in a single day. Sentiment was also hit by a rise in tensions between Israel and Iran.

TSMC has other challenges, too.

© Reuters. A smartphone with a displayed TSMC (Taiwan Semiconductor Manufacturing Company) logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

Speaking on Friday after being given an honour for his services to Taiwan, TSMC's retired and much revered founder Morris Chang said the company's current leadership needed "great wisdom" to navigate challenges to "dying" globalisation given how the firm had benefited so much from free trade.

"TSMC also faces resources challenges: land, water, power, talent, which need continued support from the government and all others," he said at the presidential office in Taipei, referring to limitations Taiwan's tech industry has long worried about.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.