Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp.
TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed.
Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said.
Photo: Daniel Ceng, AP
“The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang (黃國偉) said, referring to a Wall Street Journal report on Friday that Apple and Intel had reached a preliminary agreement for the latter to manufacture some chips for Apple devices.
“As TSMC had been leading a significant rebound of the semiconductor industry over the past month, investors simply seized on the Intel lead to lock in their gains,” Huang said. “But today’s losses were minor compared with TSMC’s previous gains, as many investors remain upbeat about its sound fundamentals during the current artificial intelligence [AI] boom.”
Prior to yesterday, TSMC shares, which account for more than 40 percent of total market value, had soared 31.25 percent since March 31, leading the TAIEX to surge 31.15 percent.
“TSMC dominates the high-end chip market worldwide, enjoying strong pricing power, and its buyers have to accept the prices it asks for,” Huang said. “In the short term, TSMC’s status will not be affected.”
Intel reported improved yield and performance in its trial run of its 14A process, which aims to compete with TSMC’s 2-nanometer process, “but that was just a trial run,” Huang said.
“Meanwhile, TSMC has started mass production of the 2-nanometer process, and demand has been robust,” he added.
As strong demand for advanced processes from AI chip customers such as Nvidia Corp has strained TSMC’s capacity, Huang said it was no surprise that Apple wanted to contract with a second chip supplier.
Other TSMC customers might follow suit in the long term, Huang said, urging investors to stay alert to such developments.
The TAIEX yesterday closed up 186.12 points, or 0.45 percent, at 41,790.06, failing to sustain all its gains above 42,000, as TSMC came under pressure on the Intel report with selling escalating late in the trading session, Moore Securities Investment Consulting Co (摩爾投顧) analyst Adam Lin (林漢偉) said.
Fortunately, buying rotated to other electronics stocks, while selected old economy stocks that have ties to AI development also attracted investors, lending support to the broader market, Lin said.
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