Ben Blanchard and Faith Han
TAIPEI (Reuters) – TSMC, a leading maker of semiconductors for artificial intelligence (AI) applications, is expected to report another strong quarterly result on Thursday but President Donald Trump’s comments about Taiwan sent its Taipei shares down 4 percent.
While TSMC’s shares, and the Taiwanese market as a whole, hit record highs, stock prices began to fall on Wednesday after Republican presidential candidate Donald Trump said Taiwan had “taken away about 100% of the U.S. semiconductor business” and called for the U.S. to pay for its defense.
TSMC’s American depositary shares fell 8% on Wednesday, but the company is expected to report a 30% increase in second-quarter profit later on Thursday. The broader Taiwan market was down 2% early Thursday.
“Trump’s comments may have political ramifications, but they won’t change market fundamentals,” said James Huang, chairman at Taipei-based Franklin Templeton Sinoam Securities Investment Management.
“Big companies are still very optimistic about AI and are investing heavily in it. I don’t think Trump’s comments will change that,” Huang added.
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker whose clients include Apple and Nvidia, is benefiting from the surge in AI adoption.
TSMC is expected to report net profit of NT$238.8 billion (US$7.33 billion) for the quarter ended June 30, according to data from 21 analysts by LSEG’s SmartEstimate. SmartEstimate places more emphasis on analyst forecasts that are more consistent and accurate.
This forecast equates to net profit of NT$181.8 billion in the second quarter of 2023.
TSMC last week reported second-quarter sales in Taiwanese dollars that were well above market expectations, and is due to release its third-quarter sales guidance in U.S. dollars.
Shares in ASML, the largest supplier of computer chip manufacturing equipment and whose main customer is TSMC, fell sharply on Wednesday on concerns that pressure from the U.S. government could lead to tougher export controls on China.
Investor concerns overshadowed second-quarter earnings from Europe’s largest technology companies, which beat expectations.
Peak Season
TSMC is due to update its outlook for the current quarter and full year, including capital expenditures, when it reports quarterly earnings starting at 6 a.m. GMT on Thursday as the company scrambles to expand production.
TSMC is spending billions of dollars to build new factories overseas, including $65 billion for three plants in the U.S. state of Arizona, but says the bulk of its manufacturing will remain in Taiwan.
In its most recent earnings report in April, TSMC maintained its capital spending forecast for this year at $28 billion to $32 billion, down from $30.45 billion last year, and said it would allocate 70% to 80% of the total to advanced technologies.
The second half of the year is typically a busy period for Taiwan’s tech companies as they compete to supply customers in key European and American markets ahead of the year-end holiday season.
The AI boom has helped boost the shares of Asia’s most valuable listed companies, with Taipei-listed TSMC’s shares up 68% so far this year, compared with a 30% rise for the broader market.
TSMC is commonly known in Taiwan as the “sacred mountain that protects the nation” because of its crucial role in the country’s export-dependent economy, and has few competitors, although both Intel and Samsung have tried to challenge its dominance.
(1 dollar = 32.5700 Taiwanese dollars)
(Reporting by Ben Blanchard and Faith Hann; Editing by Christopher Cushing and Muralikumar Anantharaman)
