Foreign brokerages have given a mixed response to Taiwan Semiconductor Manufacturing Co.’s (TSMC) decision to cut its 2022 capital expenditure (capex) budget by about 10 percent due to short-term market uncertainty.
After TSMC cut its capex forecast at an investor conference Thursday to US$36 billion from an earlier estimate of US$40 billion-US$44 billion, a European brokerage said it expected this figure to fall further to US$34 billion in 2023.
The chipmaker’s announcement comes as the sector tackles weak global demand due to ongoing inventory adjustments and central banks raising key interest rates to fight fast-growing inflation.
TSMC said it expected capacity utilization of its 6-nanometer and 7nm processes to slow in the fourth quarter of this year, with the weakness continuing into the first half of next year due to weakening demand for smartphones and PCs and delayed product launches by clients.
In addition to weaker global demand, the European securities house said a recent move by the United States to expand a ban on the export of high-performance computing IC and related equipment to China would drag down TSMC’s sales by 1-2 percent next year.
The brokerage said that while it had lowered its target price for TSMC shares to NT$745 (US$23.27) from NT$815, it had left its “buy” recommendation on the stock unchanged.
Echoing its European counterpart, an American securities firm said TSMC’s capex cut confirmed the presence of significant uncertainties ahead.
As a result, the U.S. firm said it had cut its target price for TSMC shares to NT$590 from NT$630.
On Friday, TSMC shares on the local main board staged a strong rebound from recent heavy losses, rising 4.30 percent to close at NT$412.00.
This contributed more than 140 points to the increase on the Taiex, the benchmark of the Taiwan Stock Exchange, which soared 317.39 points or 2.48 percent to end at 13,128.12.
TSMC has confirmed it has secured a one-year license to continue ordering American chipmaking equipment for its plant located in Nanjing, China.
The chipmaker said it anticipates a limited and manageable impact resulting from the latest round of export restrictions announced by the U.S. on Oct. 7, which are focused on chips used in artificial intelligence and supercomputers.
A separate U.S. brokerage said it accepted TSMC’s own assessments regarding the impact of the latest export ban imposed by Washington and agreed that the current inventory adjustments in the global semiconductor industry was expected to continue until the first half of next year.
The firm said as it expected inventory levels in the global semiconductor industry to return to normal in the second half of 2023, it had decided to maintain a target price on TSMC shares of NT$720.
A brokerage from Japan said it was impressed by TSMC’s third-quarter results when the chipmaker posted NT$280.87 billion in net profits.
This represented an 18.5 percent increase over the previous quarter, and a 79.7 percent year-over-year rise, with earnings per share at NT$10.83, as the chipmaker benefited from a weakening Taiwan dollar.
Although weakening demand will send TSMC’s capacity utilization lower in the first half of next year, the company is expected to outperform its peers, the Japanese brokerage said, reiterating a “buy” rating and raising a target price to NT$655 from NT$645 on the stock.
Source: Focus Taiwan News Channel