“I also try to balance supply and demand, but I can't. Today, demand is very high and we have had to work very hard to meet customer demand,” Wei told analysts.
“Supply will remain tight through 2025,” TSMC Chairman CC Wei said on Thursday. The company on Thursday reported revenue and net profit that beat analysts' expectations, and its shares fell less than 1%.
The semiconductor sector suffered its worst day since 2020 on Wednesday, with shares of AMD, Arm, Broadcom, Qualcomm and Nvidia falling sharply. Semiconductor stocks fell on geopolitical concerns highlighted by US presidential candidate Donald Trump's comments that he was considering changing US policy to not defend Taiwan without a quid pro quo against Chinese aggression, which would call into question Nvidia's chip supplies.
“Amid growing concerns about geopolitical tensions ahead of the US presidential election, TSMC said it will continue to expand overseas to mitigate risks,” Citi analyst Laura Chen wrote in a note on Thursday. TSMC is currently building a massive chip factory in Arizona, funded in part by US subsidies.
Other chipmakers also struggled: Arm fell 2%, AMD was down 2% and Qualcomm was flat. Nvidia's main server assembler, Supermicro Computer, fell 2%.
Intel rose more than 1%, while Broadcom rose about 3% after reports it was in talks to produce AI chips for OpenAI.
Bloomberg reported on Wednesday that the Biden administration is considering further trade restrictions on exports of semiconductor manufacturing equipment to China.ASML, a Dutch company that makes equipment used by TSMC to make chips, fell 1% after the company on Thursday gave a weak sales outlook for the current quarter.
Analysts at UBS wrote in a note on Thursday that while investors are reallocating gains from strong semiconductor stocks to other names, the sector could rally again once companies release comments later this year about how they are benefiting from their investments in AI chips. Nvidia shares have risen more than 150% so far in 2024.
“Following the semiconductor sector's strong outperformance in the first half of the year, some investors have reallocated AI-related semiconductor exposure to large platform companies and unprofitable tech companies,” UBS analysts wrote in a note.
