TAIPEI (Reuters) -Taipei-listed shares of TSMC fell more than 6% on Friday following the company’s first-quarter earnings report where it retained its capex and full-year revenue guidance and flagged only a gradual recovery for the chip sector.
Taiwan Semiconductor Manufacturing Co (TSMC), the world’s largest contract chipmaker and a major Apple and Nvidia supplier, forecast on Thursday second-quarter sales may rise as much as 30% as it rides a wave of demand for semiconductors used in artificial intelligence (AI) applications. Its first-quarter profit also beat estimates.
But it left its capital spending plans for this year unchanged at between $28 billion and $32 billion and reiterated it expected 2024 revenue to rise in the low- to mid-20% range in U.S. dollar terms.
It also lowered its outlook for the global semiconductor industry excluding memory to a growth rate of around 10% from a previous forecast of more than 10%.
Additionally, the company downgraded the growth forecast for the global foundry sector to mid-to-high teens percent from a previous projection of around 20%.
Allen Huang, Vice President of Mega International Investment in Taipei, said the market was reacting to the revision in its global outlook for the semiconductor industry, and expectations TSMC would increase its capital expenditure this year for high-end packaging.
“If capital expenditure was only maintained at the previous level, it means that profit is not as expected,” he said.
Another Taiwan fund manager, who asked not to be identified, said given TSMC’s recent stock rally investors had high expectations heading into its first quarter earnings.
“Its capex has not been so aggressive, and the percentage of advanced process technologies revenue compared to overall revenue is still pretty low,” the manager said.
Analysts at J.P. Morgan noted in their list of “key negatives” from the earnings the slower recovery in logic semiconductor demand for 2024, now 10% growth compared with 10%- plus growth guided in January due to the gradual recovery in smartphones, computers, non-AI servers and a decline in auto demand.
The broader Taipei market was down more than 3.5% on Friday morning.
(Reporting by Ben Blanchard and Yimou Lee; Additional reporting by Faith Hung and Jeanny Kao; Editing by Christopher Cushing, Muralikumar Anantharaman and Shri Navaratnam)