Arizona chip production: The world’s largest contract chipmaker predicts a 10% revenue reduction in 2023 and will delay output at its Arizona factory. Taiwan Semiconductor Manufacturing Co. shares dropped over 3% on Friday. The
announcement came after the company said it will delay production at its Arizona plant.
TSMC (TSM) reported a 23% drop in Q2 net profit compared to last year. Since 2019, this is the first time the corporation’s quarterly earnings have decreased compared to the previous year.
Brady Wang, an assistant director at Counterpoint Research, sees long-term growth potential despite declining sales and earnings. TSMC’s future outlook is positive, despite the weak economy. This is because of megatrends like 5G and high-performance computing.”
TSMC’s global growth accelerates, but its Arizona plant’s production delay until 2025 due to insufficient skilled workers.
“While we work to improve the situation, including sending technicians from Taiwan to train local workers, the production schedule for N4 process technology will be pushed back to 2025,” TSMC chairman Mark Liu said.
The overall amount that TSMC has put into the US project is $40 billion.
The company stated that being the top AI chip maker and high demand for AI isn’t sufficient due to slower global economic recovery.
“The short-term excitement about AI demand cannot be extrapolated to the long term at all.According to Liu, “We are also unable to predict how the sudden demand will persist or change in the near future, which means throughout the course of the following year.”
Despite this, the company announced earnings for the quarter that ended in June that were 5.85 billion Taiwan dollars (181.8 billion Taiwan dollars), which were more than what was expected.
The investment bank Goldman Sachs stated in a research report that “We think TSMC is set up well for strong growth in 2024.” “We think investors are also ready for the US expansion to be put off.”
Other analysts were also optimistic about TSMC, in part because there is a lot of demand for AI, which makes up about 6% of the company’s sales right now.
Citi Research analysts said in a note, “We expect a good outlook through 2024 because it is the leader in making AI chips.”