The final quarterly report of the Taiwanese semiconductor manufacturer TSMC will not be published until tomorrow, but the sales figures published monthly suggest that the group has exceeded the experts’ expectations. In particular, the partnership with the chip group NVIDIA and its AI efforts should have benefited TSMC.
• Sales down – but above expectations
• Conflict between US and China raises concern
• Analysts give thumbs up
TSMC looks set to beat revenue expectations
Tomorrow, Thursday, the Taiwanese semiconductor manufacturer TSMC (Taiwan Semiconductor Manufacturing Company) will open the books for the past second quarter of 2023. But even before the detailed quarterly report is available, the preliminary sales figures of the Taiwanese market player are already known. This is because TSMC provides monthly reports on earnings.
As the news agency “Bloomberg” reported in the run-up to the final figures, sales of 480.8 billion new Taiwan dollars should be reported, which corresponds to around 15 billion US dollars. If the calculation were to be true, this would correspond to a decline of 10 percent compared to the same quarter last year, when 534.141 billion New Taiwan dollars or 18.158 billion US dollars were on the books, but the group would still get off relatively lightly. Analysts expect an average turnover of 476.2 billion New Taiwan dollars.
USA-China conflict: is TSMC caught between the fronts?
The trade conflict between the USA and China, which now also affects the chip area, is considered a major challenge for the group. In this way, both countries want to gain supremacy in the production of the important components. To this end, US President Joe Biden passed the CHIPS and Science Act last year, which is intended to promote the research and manufacture of semiconductors in the USA. But China also wants to improve in this area – and break away from imports from the USA. In May 2023, the Chinese cyber security authority warned of “significant security risks” from the use of chips from Micron Technology, the largest memory chip manufacturer in the USA. However, according to the Asia Times, TSMC currently manufactures semiconductors for Chinese and US companies, raising concerns about US sanctions against the Taiwanese company. However, TSMC Chairman Mark Liu recently promised the “IT-Times” that he wanted to weaken the conflict between the USA and China in a stabilizing manner. If the chip industry is successful in the Middle Kingdom, this could also have a positive effect on global economic policy.
AI partner NVIDIA powers TSMC
According to Bloomberg, TSMC is the most important contract manufacturer for hardware from the US chip giant NVIDIA, which is used in the use of artificial intelligence (AI). The powerful hardware from the company based in Santa Clara, California, is not only used for game consoles and private and business computers, but is also used in servers – such as those on which the popular chatbot ChatGPT from the AI startup OpenAI is operated. With NVIDIA, the world’s largest independent semiconductor manufacturer has a major customer on its hook – and can benefit from the current demand for AI solutions.
Goldman Sachs experts: TSMC is “AI enabler”
Analysts at major US bank Goldman Sachs agree. “We see TSMC as the key AI enabler in our Taiwan semiconductor coverage thanks to its leading position in leading nodes and advanced packaging technology,” explained strategists Bruce Lu and Evelyn Yu accordingly of the Bloomberg report. In this context, the two experts also increased their price target for the TSMC share to 700 new Taiwan dollars.
Incidentally, the Goldman analysts are not alone with their positive outlook: according to Bloomberg, 37 strategists are currently recommending buying the shares in the semiconductor giant. This is offset by a “hold” rating. However, there are currently no sell recommendations.
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