TAIPEI (Reuters) -TSMC’s Taipei-listed shares tumbled 6.7% on Friday following the corporate’s first-quarter earnings report during which it dialled again its expectations for chip sector development and didn’t revise up its capital spending plans, opposite to expectations.
Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker, forecast second-quarter gross sales might rise as a lot as 30% because it rides a wave of demand chips utilized in synthetic intelligence (AI) functions. Its first-quarter revenue additionally beat estimates.
However it left its capital spending plans for this yr unchanged at between $28 billion and $32 billion and reiterated it anticipated 2024 income to rise within the low- to mid-20% vary in U.S. greenback phrases.
It lowered its outlook for the worldwide semiconductor trade excluding reminiscence to a development fee of round 10% from a earlier forecast of greater than 10%.
TSMC, a serious provider to Apple (NASDAQ:) and Nvidia (NASDAQ:), additionally downgraded its development forecast for the worldwide foundry sector to a mid-to-high teenagers share acquire from a earlier projection of round 20%.
Allen Huang, vp of Mega Worldwide Funding in Taipei, mentioned the market was reacting to the revised outlook for the semiconductor trade, including that TSMC had been anticipated to extend capital expenditure this yr for high-end packaging.
“If capital expenditure was solely maintained on the earlier degree, it implies that revenue shouldn’t be as anticipated,” he mentioned.
One other Taiwan fund supervisor, who requested to not be recognized, mentioned given TSMC’s current inventory rally traders had excessive expectations heading into first-quarter earnings.
“Its capex has not been so aggressive, and the share of superior course of applied sciences income in comparison with total income continues to be fairly low,” the supervisor mentioned.
TSMC’s poor share value efficiency dragged on the broader Taipei market which closed down 3.8%, recording its largest drop on a single day. Sentiment was additionally hit by an increase in tensions between Israel and Iran.
TSMC has different challenges, too.
Talking on Friday after being given an honour for his companies to Taiwan, TSMC’s retired and far revered founder Morris Chang mentioned the corporate’s present management wanted “nice knowledge” to navigate challenges to “dying” globalisation given how the agency had benefited a lot from free commerce.
“TSMC additionally faces sources challenges: land, water, energy, expertise, which want continued assist from the federal government and all others,” he mentioned on the presidential workplace in Taipei, referring to limitations Taiwan’s tech trade has lengthy nervous about.