Taipei, Taiwan – Shares of Taiwan Semiconductor Manufacturing Co (TSMC) took a significant hit, with a 6.7% drop on Friday following the release of the company’s first-quarter earnings report. Despite forecasting a potential 30% increase in second-quarter sales due to high demand for chips used in artificial intelligence applications, TSMC opted not to revise its capital spending plans, disappointing market expectations.
The world’s largest contract chipmaker maintained its capital spending projections for the year at a range between $28 billion and $32 billion, while anticipating a revenue growth of low- to mid-20% range in U.S. dollar terms by 2024. Additionally, TSMC adjusted its growth forecast for the global semiconductor industry excluding memory to around 10%, down from its previous estimate of more than 10%.
With major clients like Apple and Nvidia, TSMC also downgraded its growth forecast for the global foundry sector to a mid-to-high teens percentage gain, compared to its original projection of around 20%. Analysts noted that the market reacted to TSMC’s revised industry outlook, particularly expecting increased capital expenditure for high-end packaging this year.
Reacting to the company’s stock performance, investors expressed disappointment with TSMC’s stock rally leading up to its first-quarter earnings report. The lack of aggressive capital expenditure and the relatively low percentage of advanced process technologies revenue compared to total revenue raised concerns among market participants.
TSMC’s underperformance in the stock market also impacted the broader Taiwan market, which saw a decline of 3.8% – the most significant one-day loss of 774 points. The market sentiment was further dampened by escalating tensions between Israel and Iran. TSMC’s retired founder, Morris Chang, highlighted the challenges ahead for the company’s leadership in navigating the global landscape, emphasizing the need for wisdom amid changing dynamics in global trade and resource constraints.
Despite facing challenges in the market and industry, TSMC remains a key player in the semiconductor sector, with its strategic decisions influencing broader market trends and investor sentiment. As the company continues to adapt and innovate, investors and analysts will closely monitor TSMC’s future performance and strategic direction.