TSMC’s rather optimistic quarterly report and accompanying forecasts from the company’s management could not outweigh the negative information background generated the day before by US presidential candidate Donald Trump’s statements about Taiwan. The company’s management emphasized that it does not intend to create a joint venture with local companies in the United States.
Image Source: Samsung Electronics
In fact, the very likelihood of creating such a joint venture is dictated by the specifics of TSMC’s work on the construction of enterprises in Japan, where it is the majority shareholder of the JASM joint venture, and local Sony and Denso each own 20 and 10% of its shares, respectively. In Germany, where TSMC is going to build its chip factory, a joint venture has also been created in which the Taiwanese company itself controls 70% of the shares, and the remaining 30% is distributed in equal shares between Bosch, Infineon and NXP. The latter, although registered in the Netherlands, is capable of representing the interests of the European semiconductor business.
In the US, TSMC builds advanced chip manufacturing facilities on behalf of its wholly owned subsidiary. CEO C.C. Wei said in a Q&A with analysts following the release of quarterly earnings yesterday that TSMC has no plans to create a joint venture in the United States to address geopolitical uncertainties. All projects to expand TSMC’s production capacity outside of Taiwan, he said, are now being implemented according to pre-planned plans: “So far, we have not made any changes to plans to expand our overseas factories. We will continue to expand in Arizona and Kumamoto, Japan, and likely in Europe in the future. There are no changes to our strategy. We continue to act in accordance with current practice.”
The stock market ultimately reacted to mixed signals regarding its chip business in Taiwan by sending TSMC shares down 1.79% in morning trading, although they had firmed slightly in pre-market trading yesterday. In general, the Taiwan stock index also fell by 0.73% on Friday morning, so geopolitical factors in the eyes of investors turned out to be more significant than technological and economic ones.
But Barclays analysts generally gave a positive assessment to TSMC management’s announcements about the company’s immediate plans. For her, according to experts, the boom in artificial intelligence systems is useful because the average chip area of produced chips will increase by 10%, and therefore customers will need more chips to solve their own problems. Accordingly, the revenue of TSMC, which produces these chips from silicon wafers of a fixed area, will increase. In addition, demand for advanced process technology will increase, and the same 2nm technology could generate more revenue for TSMC than 3nm technology at a comparable stage in the market cycle.