Key Points:
- TSMC’s shares dropped 6.7% following its first-quarter earnings report. Due to AI chip demand, second-quarter sales are forecasted to increase by up to 30%.
- Capital spending plans for the year are maintained at $28 billion to $32 billion. The outlook for global semiconductor industry growth is revised to around 10%.
- The growth forecast for the global foundry sector lowered. Analysts express concerns over TSMC’s capital expenditure not meeting expectations.
- Retired founder Morris Chang emphasized the need for wisdom in navigating global challenges and highlighted resource challenges faced by TSMC.
Taiwan Semiconductor Manufacturing Co (TSMC) witnessed a significant decline of 6.7% in its Taipei-listed shares following its first-quarter earnings report. Despite forecasting a potential 30% increase in second-quarter sales, TSMC’s decision not to revise its capital spending plans dampened investor expectations.
As the world’s largest contract chipmaker, TSMC’s first-quarter profit surpassed estimates, buoyed by the surge in demand for chips used in artificial intelligence (AI) applications. However, investors were disappointed as the company maintained its annual capital expenditure forecast at $28 billion to $32 billion.
Despite anticipating a revenue rise in the low to mid-20% range in U.S. dollar terms for 2024, TSMC revised its outlook for the global semiconductor industry, excluding memory, to a growth rate of around 10%, down from its previous forecast. Additionally, it lowered its growth forecast for the global foundry sector to a mid-to-high teens percentage gain from the earlier projection of approximately 20%.
Market analysts expressed concerns over TSMC’s conservative approach toward capital expenditure, particularly in high-end packaging. Allen Huang, vice president of Mega International Investment, highlighted that maintaining the previous level of capital expenditure could impact profitability contrary to market expectations. Another Taiwan fund manager emphasized investors’ high expectations following TSMC’s recent stock rally.
In addition to market challenges, TSMC’s retired founder, Morris Chang, highlighted the need for “great wisdom” for the current leadership to navigate global challenges to “dying” globalization. Chang emphasized the importance of continued government support in addressing resource challenges such as land, water, power, and talent, which have long been concerns for Taiwan’s tech industry.
