Shares of TSMC fall by about 7% in Taipei due to worries about the global semiconductor outlook

Shares of TSMC fall by about 7% in Taipei due to worries about the global semiconductor outlook

The biggest contract chipmaker in the world, Taiwan Semiconductor Manufacturing Co. (TSMC), predicts that second-quarter revenues might increase by as much as 30% as it capitalizes on the surge in demand for chips used in artificial intelligence (AI) applications. Its first-quarter earnings exceeded forecasts as well.

The company's first-quarter results report, which surprised investors by downgrading projections for growth in the semiconductor industry and leaving its capital investment plans mostly unchanged, sent TSMC's Taipei-listed shares down 6.7% on Friday.

The biggest contract chipmaker in the world, Taiwan Semiconductor Manufacturing Co. (TSMC), predicts that second-quarter revenues might increase by as much as 30% as it capitalizes on the surge in demand for chips used in artificial intelligence (AI) applications. Its first-quarter earnings exceeded forecasts as well.

It did, however, maintain its capital investment projections for this year, which remain at $28 billion to $32 billion, and it restated its expectation that revenue would increase by between low and mid-20% in US dollars by 2024.

From a prior prediction of more than 10%, it reduced its projection to a growth rate of around 10% for the global semiconductor sector excluding memory.

Additionally, TSMC, a significant supplier to both Apple and Nvidia, reduced its growth estimate for the global foundry industry from a prior estimate of about 20% to a mid-to-high teens percentage rise.

Vice president of Mega International Investment in Taipei Allen Huang stated that the market was responding to the updated projections for the semiconductor sector, noting that TSMC was anticipated to raise capital expenditures for premium packaging this year.

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

An other Taiwanese fund manager, who wished to remain anonymous, said that investors had high expectations for first-quarter profits because of TSMC's recent stock surge.

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

Due to TSMC's subpar share price performance, the Taipei market as a whole finished down by 3.8%, marking the worst decline in a single day. Increased hostilities between Iran and Israel also had a negative impact on sentiment.

TSMC also faces additional difficulties.

Speaking on Friday, after his recognition for his contributions to Taiwan, the late and much-loved founder of TSMC, Morris Chang, said that given the business's substantial gains from free trade, the present leadership of the company required "great wisdom" to handle difficulties to "dying" globalization.

"TSMC also faces resources challenges: land, water, power, talent, which require continued support from the government and all others," he said, alluding to the constraints that the country's tech sector has long been concerned about, at the presidential office in Taipei.