TSMC Shares Down 4% As Margin Worries Outweigh Demand

Taiwan Semiconductor Manufacturing Co., Asia’s largest company by market capitalization outside of China, fell nearly 4% in Friday trading in Taipei, after four days of gains.

TSMC’s gross profit margin for the first six months of the year was 50 percent, well below the 51 percent average analysts estimate, in part due to the strengthening of the Taiwanese dollar during this time, Bloomberg said. on Friday.

Morgan Stanley analysts called TSMC’s third-quarter guidance a “disappointment,” warning that gross margins could fall below 50% early next year, the report said.

While the world’s largest contract chipmaker posted record quarterly sales and expected higher revenue for the current quarter, investors have taken profits, worried that the timing The company’s best could have been behind.

TSMC CEO CC Wei told analysts on a call that he expected chip deliveries to automakers in particular to increase in the current quarter and for the rest of 2021. .

“That is great income and to me, the market seems to be overreacting,” Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities, said in a statement quoted by Channel News Asia.

However, Fujito also said that TSMC’s lower profit margin led to the assessment that “the company’s growth momentum may peak.”

TSMC has faced pressure to increase capacity to help alleviate supply shortages that have affected the automotive and other industries.

The Taiwan-based company pledged earlier this year to allocate $100 billion over three years to build new fabrication facilities and invest in more advanced nodes, as competitors like Samsung Electronics and Intel are looking to catch up.

Today, there are only three foundries that can mass produce chips of 10 nanometers or less – TSMC, Samsung and Intel.

TSMC remains ahead of both companies in the “process race” to make semiconductors smaller and more energy efficient.

TSMC said it would ramp up production capacity in China and did not rule out a “phase two” expansion at its $12 billion plant in the US state of Arizona.

Meanwhile, sales for this year will grow more than 20%, up slightly from previous estimates of 20% growth in full-year sales, TSMC said.

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