TSMC shares fall 3.3% after it cuts revenue outlook, delays production

tsmc-shares-fall-3.3%-after-it-cuts-revenue-outlook,-delays-production
TSMC shares fall 3.3% after it cuts revenue outlook, delays production

Shares of Taiwan’s TSMC (2330.TW) fell over 3% on Friday as the world’s largest contract chipmaker projected a 10% decline in sales for 2023 and announced a delay in the start of production at its Arizona plant. The company reported a 23.3% drop in second-quarter net profit, its first year-on-year decline since Q2 2019, due to reduced demand for chips amid global economic challenges. TSMC’s shares closed down 3.28% on Friday, while the broader index (TWII) experienced a 0.78% loss. Despite the disappointing financial results, analysts remain optimistic about TSMC’s long-term growth prospects, citing trends like 5G and high-performance computing (HPC) as drivers. However, TSMC’s expansion plans have hit a snag as the production at its Arizona plant will be delayed until 2025 due to a shortage of skilled workers. The company’s Q2 earnings of T$181.8 billion ($5.85 billion) exceeded expectations, and the downward revision of full-year revenues was anticipated. Goldman Sachs believes that the revenue guidance revision may be the last cut for TSMC, as they expect the inventory correction cycle to end in Q4 2023, positioning the company for strong growth in 2024. The delay in the U.S. expansion was also anticipated by investors. Analysts are positive about TSMC’s future, particularly due to the strong demand for AI chips, which currently contribute around 6% of the company’s revenue. Overall, TSMC’s long-term outlook remains promising despite the current challenges.

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