Taiwan chipmaker TSMC shares dip by 3.3% after revenues dropped 10%
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The company's plans to start production at its first plant in Arizona next year might be delayed.
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Taiwan Semiconductor Manufacturing Co., Ltd. (TSMC) logo brands the headquarters in Hsinchu, Taiwan, Wednesday, Oct. 20, 2021. (AP)
Shares of Taiwan's biggest company and Apple Inc.'s main chipmaker, TSMC (2330.TW) fell by more than 3% on Friday after the company flagged a 10% in its 2023 sales, Reuters reports.
As a result, the company's plans to start production at its first plant in Arizona next year might be delayed.
As per the Capital Economics research group, TSMC makes more than 90% of the world’s most developed microchips.
US tech giants like Intel, Apple, Qualcomm, NVIDIA, Broadcom, and AMD all depend on TSMC, while the US government depends on it for some of the most complex systems.
Amid global economic turmoil and a trade war waged by the US against Chinese chipmakers, TSMC reported on Thursday that its Q2 net profits fell by 23.3% - its first on-year drop in quarterly profit since the second quarter of 2019.
On Friday, TSMC's shares closed down 3.28% on Friday, versus a 0.78% loss for the broader index (.TWII).
Read more: China center of Washington-chip giants' talks next week: Reuters
"TSMC's Q2 2023 earnings sent mixed signals. While the company's declining revenue and profit were disappointing, its long-term growth prospects remain encouraging," Brady Wang, associate director at Counterpoint Research, told Reuters.
"Despite facing macroeconomic headwinds, TSMC's long-term outlook remains robust, supported by megatrends like 5G and high-performance computing (HPC)."
Due to the lack of skilled workers, the company said production in its new plant in Arizona may have to be delayed until 2025.
Analysts say that the company's earnings of T$181.8 billion ($5.85 billion) for Q2 indicate that forecasts may have to be reviewed for full-year revenues.
"The revenue guidance downward revision could be the last cut for TSMC as the inventory correction cycle is likely coming to an end in 4Q23, in our view, and we see TSMC well positioned for a strong growth outlook in 2024," Goldman Sachs said in a research note.
"We believe the US expansion delay is also well expected by investors."
Other observers say they were rather optimistic that TSMC may compensate for its fallouts thanks to strong demand for artificial intelligence which accounts for approximately 6% of revenue.
"We expect a solid 2024 onward outlook on the back of its leading position in AI chip manufacturing," Citi Research analysts said in a note.
