Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, came under pressure yesterday amid speculation that its major clients have cut their orders.
The stock faced a sell-off on the Taiwan Stock Exchange (TWSE) after the Chinese-language Economic Daily News reported that four major TSMC clients — MediaTek Inc (聯發科), Advanced Micro Devices Inc, Qualcomm Inc and Nvidia Corp — have scaled back their orders, citing a JPMorgan Chase & Co report.
The order cut has led TSMC to shut down four extreme ultraviolet (EUV) lithography machines, which roll out high-end chips, the report said.
Photo: Cheng I-hwa, Bloomberg
According to the report, demand for consumer electronic products such as smartphones and emerging technologies including high-performance computing devices, is weakening as the global economy slows down, impacting TSMC\'s operations.
In addition, the US government has instructed Nvidia and AMD not to supply their high-end graphics processing units to China, a move which also hurt demand, the report said.
The report said the four major clients accounted for more than 30 percent of TSMC\'s total sales and the shutdown of the four EUV lithography machines is likely to cut the chipmaker\'s net profit by 8 percent next year, with sales growth expected to hit 5 percent in US dollar terms.
The report added that TSMC\'s capital expenditure is expected to fall to US$36 billion in 2023 from an expected US$40 billion for 2022.
TSMC said it would not comment on market rumors and reiterated that its production capacity remains fully utilized until the end of the year and its sales growth forecast for the year remains unchanged.
Although the global economy faces headwinds in the short term, the long-term demand in the semiconductor industry is expected to remain solid, TSMC said.
“It appeared that the report about TSMC’s clients cutting orders stunned the market, pushing down the stock sharply, and the broader market had no choice but to follow,” Cathay Futures Consultant Co (國泰證期顧問) analyst Tsai Ming-han (蔡明翰) said.
“But I still have faith in TSMC’s lead over its peers in high-end processes, and the impact on its share price from the speculation could be short-lived,” Tsai said.
TSMC, the most heavily weighted stock in the local market, shed 3.37 percent to close at NT$472.5, with 34.63 million shares changing hands, an increase from Tuesday’s 16.66 million shares, TWSE data showed.
TSMC’s retreat contributed about 135 points to the decline of the TAIEX, which closed 267.15 points, or 1.82 percent, lower at 14,410.05, exchange data showed.
Chip stocks are in focus in Asia trading after a senior executive at Samsung Electronics Co warned that the semiconductor industry could be in for a rocky close this year.
“The general perception earlier this year was that the second half of would be better than the first half, but from April to May, it changed drastically,” said Kyung Kye-hyun, head of Samsung’s Device Solutions Division, which oversees the company’s semiconductor operations. “The world is changing so quickly.”
Kyung said the outlook for the second half of the year is gloomy, and Samsung is not yet seeing momentum for a recovery next year.
Kyung made the comments during a rare briefing yesterday at the company’s new chip fab in Pyeongtaek, South Korea.
Samsung’s strategy is to respond faster to market changes, rather than stick to an investment plan prepared in advance, he said.
That said, the company will do its best to keep capital expenditures steady, he added.
Separately, Macronix International Co (旺宏), the world’s biggest supplier of NOR flash memory chips, yesterday said revenue plummeted 25.6 percent to NT$3.73 billion (US$120.6 million) last month, from NT$5.01 billion a year earlier.
Memory module supplier Adata Technology Co (威剛科技) also reported that revenue declined 6.6 percent annually to NT$3 billion last month from NT$3.22 billion.
Adata said consumer demand fell short of expectations during the peak season, but the company sees limited room for DRAM spot prices to dip further.
Additional reporting by Bloomberg and Lisa Wang
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
Greek tourism student Katerina quit within a month of starting work at a five-star hotel in Halkidiki, one of the country’s top destinations, because she said conditions were so dire. Beyond the bad pay, the 22-year-old said that her working and living conditions were “miserable and unacceptable.” Millions holiday in Greece every year, but its vital tourism industry is finding it harder and harder to recruit Greeks to look after them. “I was asked to work in any department of the hotel where there was a need, from service to cleaning,” said Katerina, a tourism and marketing student, who would
Meta Platforms Inc offered US$100 million bonuses to OpenAI employees in an unsuccessful bid to poach the ChatGPT maker’s talent and strengthen its own generative artificial intelligence (AI) teams, OpenAI CEO Sam Altman has said. Facebook’s parent company — a competitor of OpenAI — also offered “giant” annual salaries exceeding US$100 million to OpenAI staffers, Altman said in an interview on the Uncapped with Jack Altman podcast released on Tuesday. “It is crazy,” Sam Altman told his brother Jack in the interview. “I’m really happy that at least so far none of our best people have decided to take them