© Reuters. FILE PHOTO: The logo of Taiwanese chip giant TSMC can be seen in Tainan, Taiwan, December 29, 2022. REUTERS/An Wang/File Photo
TAIPEI (Reuters) – Shares of Taiwan’s TSMC fell more than 3% on Friday after the world’s largest chipmaker reported a 10% drop in 2023 sales and said production scheduled to start next year at its first plant in Arizona would be delayed.
In early trade, shares of Taiwan Semiconductor Manufacturing Co Ltd underperformed a 1.65% drop in the broader index.
On Thursday, TSMC reported a 23.3% drop in second-quarter net profit — the first year-over-year decline in quarterly profit since the second quarter of 2019 — as global economic woes weighed on demand for chips used in everything from cars to cellphones.
“TSMC’s earnings for the second quarter of 2023 sent mixed signals. While the company’s decline in revenue and earnings was disappointing, its long-term growth prospects remain encouraging,” said Brady Wang, associate director at Counterpoint Research.
“Despite facing macroeconomic headwinds, TSMC’s long-term outlook remains strong, supported by mega-trends such as 5G and high-performance computing (HPC).”
As TSMC ramps up its global expansion, the company said production at its first plant in Arizona will be delayed until 2025 due to a shortage of specialized workers.
The company’s profit of 181.8 billion Taiwan dollars ($5.85 billion) for the quarter ending in June still beat expectations, and analysts said the full-year revenue revision was expected.
“A downward revision of revenue guidance could be the latest downgrade for TSMC as the inventory correction cycle likely ends in Q4 2023, in our view, and we see TSMC well positioned for a strong growth outlook in 2024,” Goldman Sachs (NYSE:) said in a research note.
“We believe that investors also expect a delay in US expansion,” he added.
Other analysts were also bullish on TSMC, thanks in part to strong demand for artificial intelligence (AI), which currently contributes about 6% of revenue.
“We expect a strong outlook for 2024 on the back of its leading position in manufacturing AI chips,” Citi Research analysts said in a note.
