TSMC’s Taipei-listed stocks plunged by 6.7% on Friday following its first-quarter earnings report. The report adjusted chip sector growth expectations downwards and maintained capital spending plans, contrary to market anticipations.
Taiwan Semiconductor Manufacturing Co (TSMC), the globe’s leading contract chipmaker, anticipated potential second-quarter sales growth of up to 30%. This surge in demand primarily stems from chips utilized in artificial intelligence (AI) applications. Furthermore, its first-quarter profits surpassed forecasts.
Despite these positive figures, TSMC opted to keep its capital spending projections for the year unchanged, ranging from $28 billion to $32 billion. It reiterated its forecast of a low- to mid-20% increase in revenue for 2024 in U.S. dollar terms.
However, TSMC revised down its outlook for the global semiconductor industry excluding memory, now anticipating a growth rate of around 10%, down from a previous forecast of over 10%. Moreover, it adjusted its growth forecast for the global foundry sector to a mid-to-high teens percentage gain, compared to the previous projection of around 20%.
Allen Huang, vice president of Mega International Investment in Taipei, attributed the market reaction to the semiconductor industry’s revised outlook. He noted that there were expectations for TSMC to ramp up capital expenditure this year, particularly for high-end packaging. Huang expressed concerns, stating that maintaining capital expenditure at previous levels could impact profitability.
The poor performance of TSMC’s shares weighed heavily on the broader Taipei market, which saw a decline of 3.8%, marking the largest single-day loss of 774 points on record. Additionally, market sentiment was dampened by escalating tensions between Israel and Iran.
Despite its current challenges, TSMC faces other obstacles in maintaining its market position and sustaining growth.
