4/19/2024

TSMC shares fell nearly 7% after the report

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Key points:

  • TSMC shares fell 6.7% on Friday after reporting first-quarter earnings.
  • However, TSMC is forecasting strong sales growth in the second quarter due to demand for AI chips.
  • Revenue growth in 2024 is expected to be 10-20% in dollar terms.

Shares of TSMC, traded on the Taipei Stock Exchange, fell 6.7% on Friday. The decline came after the company released its first-quarter earnings report, in which it presented pessimistic forecasts for growth in the chip sector. Contrary to investor expectations, the semiconductor company did not adjust its capital spending plans.

TSMC’s forecasts are optimistic

TSMC, the world’s leading custom chipmaker, forecast strong sales growth in the second quarter driven by strong demand for chips used in artificial intelligence applications. The first quarter also saw TSMC beat earnings estimates.

Despite the optimistic outlook for the second quarter, the company did not adjust its capital spending plans for 2024, leaving them in the range of $28 billion to $32 billion.

TSMC also reiterated its expectations for revenue growth in 2024, forecasting growth in the low to mid 20% dollar range. At the same time, the company lowered its forecast for the growth rate of the global semiconductor industry excluding memory, expecting an increase of about 10%, lower than its previous forecast of more than 10%.

It’s worth noting that TSMC, a major chip supplier to Apple and Nvidia, has lowered its growth forecast for the global foundry sector to mid-to-high percentage growth, down from its previous forecast of around 20%.

Competitor news

Senator Chuck Schumer, the Democratic majority leader in the US Senate, announced that memory chip maker Micron Technology will receive $6.1 billion in grants from the US Commerce Department.

The funds will be used to finance chip production projects in the United States under the CHIPS & Science Act.

The Micron grant will be the fourth major funding awarded under this initiative:

  • Last month, Intel received a grant worth $8.5 billion.
  • TSMC received $6.6 billion in April to develop its American production.
  • Samsung joined the ranks of grant recipients this week, receiving $6.4 billion to boost production in Texas.

The market reacted positively to Micron’s grant news, expecting the company to also increase capital spending on high-end packaging this year.

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