Taiwan chipmaker TSMC shares jumped 3.7% in trading on Friday after a surge in second-quarter profit that beat estimates.
Taiwan Semiconductor Manufacturing Co Ltd (TSMC), a key Apple supplier and the world’s largest contract chipmaker, said profit soared by 76.4% in the April-June period, to T$237.0 billion ($7.92 billion).
It said it was “highly confident” about its long-term prospects, while also indicating cooling demand from consumer electronics customers who it expects will cut down chip stockpiles in the short-term.
The market has been wary of a possible chip glut due to slowing consumer demand and soaring inflation, especially after Micron Technology last month said a chip shortage in some sectors was quickly turning into a glut.
Downturn In Semiconductor Industry
TSMC’s earnings are likely to ease some of those worries for now.
Analysts at JP Morgan said TSMC’s acknowledgement of the downturn was a “positive start”, and they expected the chipmaker’s stock price to move up modestly in the near-term.
“But confirmation of [the] downturn from other semi companies in this earnings season is necessary for a definitive clearing event.”
TSMC’s shares are still down about 20% so far this year, in line with broader local market, as investors fear that Taiwan’s export-dependent economy will be hit by slowing consumer demand in China, the United States and Europe.
Morningstar analysts said they believed Qualcomm and Nvidia Corp’s increased allocation to TSMC would have cushioned the impact of most of the overall softened demand for the next 12 months.
“We note that the duo has contracted TSMC as their primary foundry (if not sole) for most of 2023’s consumer products because of low production yields at Samsung Electronics.
Taiwan’s benchmark index was up around 0.7% on Friday morning.
- Reuters with additional editing by Sean O’Meara