Stock Market

TSMC Faces Setback: Shares Drop 3.3% as Revenue Outlook is Slashed and Production Delayed

TSMC’s shares took a nasty 3.3% tumble on Friday! That’s right, folks! Taiwan’s biggest contract chipmaker ain’t having it easy. They had to lower their 2023 sales forecast by a whopping 10%. Ouch! And that’s not all, their plans to kickstart production at their brand-spankin’-new plant in Arizona got hit with a delay! Oh boy!

Last Thursday’s report hit ’em hard, showing a jaw-dropping 23.3% drop in second-quarter net profit. That’s the first time they’ve seen a decline in quarterly profit since way back in 2019. Tough times, huh? You bet! Seems like the global economic mess is putting a dent in the demand for chips used in cars, phones, and everything in between.

As a result, Taiwan Semiconductor Manufacturing Co Ltd’s shares ended up 3.28% down on Friday. Ouchie!

But hang on, folks! Don’t hit the panic button just yet! Brady Wang, the associate director at Counterpoint Research, says it ain’t all bad news. Sure, the revenue’s droppin’ and the profit’s takin’ a hit, but there’s a silver lining. TSMC’s got some long-term growth prospects that are still lookin’ promising. Yup, you heard that right!

Despite the macroeconomic headwinds, TSMC’s holdin’ on strong, thanks to the megatrends like 5G and high-performance computing (HPC). They’re playin’ the long game!

But hold your horses! TSMC’s gotta deal with some setbacks in their expansion plans. Their Arizona plant’s gotta wait a little longer, folks! Why, you ask? ‘Cause there’s a shortage of those specialist workers they need. Darn it!

Don’t go breakin’ out the tissues, though. TSMC still managed to pull in some hefty earnings, around T$181.8 billion ($5.85 billion) for the quarter endin’ in June. Not too shabby! They even beat some forecasts, so that’s somethin’ to celebrate, right?

Now, folks, pay attention to this bit! The downward revision in revenue forecasts was kinda expected. No big surprise there, eh? Goldman Sachs says this might just be the last cut for TSMC ’cause they reckon the inventory correction cycle’s comin’ to an end in 4Q23. And you know what that means? Strong growth ahead in 2024! Woohoo!

And guess what? The U.S. expansion delay ain’t got folks panickin’ either. Investors saw that comin’. They’re a savvy bunch!

You know what’s keepin’ the analysts upbeat about TSMC? It’s that hot demand for artificial intelligence (AI), folks! Yeah, AI’s doin’ its magic, contributin’ about 6% of TSMC’s revenue. Not too shabby, huh?

Citi Research analysts are seein’ some bright skies for TSMC. They’re expectin’ a solid outlook from 2024 onwards, all thanks to TSMC’s top spot in AI chip manufacturing. Now that’s somethin’ to be excited about!

So, folks, there you have it. TSMC might be facin’ some rough waters right now, but they’re keepin’ their eye on the prize – that long-term growth is lookin’ mighty promising. Let’s all cross our fingers and hope they ride this storm and come out stronger on the other side!

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