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(Bloomberg) – Shares of Taiwan Semiconductor Manufacturing Co. fell the most in two months after gross margins disappointed investors who had bet on the chipmaker to take advantage of the current chip shortage.
The stock fell 3.9% on Friday in Taipei, posting four days of gains. The gross margin for the second quarter was 50%, below the average of about 51% expected by analysts, in part due to the appreciation of the Taiwan dollar during the period. For the September quarter, TSMC forecasts a gross margin of 49.5% to 51.5%. Morgan Stanley analysts called the third quarter forecast a “disappointment,” warning that gross margins could fall below 50% as early as next year.
TSMC, the world’s largest subcontractor, has faced increasing pressure to expand capacity to help alleviate the supply shortage that has plagued the automotive and other industries. The Taiwanese company pledged earlier this year to spend $ 100 billion over three years to build new factories and invest in more advanced nodes, as competitors like Intel Corp. and Samsung Electronics Co. are looking to catch up. TSMC executives also revealed Thursday for the first time that the chipmaker is evaluating plans for a manufacturing plant in Japan.
“We still believe that at some point in 2022 and 2023, TSMC’s gross margin will drop below 50% given the steep rise in depreciation costs, while the company does not appear to be showing the power to pricing, ”wrote Morgan Stanley analysts headed by Charlie Chan. a note after the winnings. “Or, simply as stated, Moore’s Law is just getting too expensive while TSMC will have to experience margin erosion to keep the chip scaling trend going.”
The disappointing margins eclipsed an increased sales projection based on its pivotal role in alleviating a global chip tightening plaguing automakers and device makers. TSMC said sales this year will grow by more than 20%, a slight increase from previous forecasts of 20% full-year sales growth. Revenue for the current quarter could reach between $ 14.6 billion and $ 14.9 billion, in line with analysts’ average of $ 14.7 billion.
Some analysts have said TSMC has failed to meet inordinate expectations. The results “exceeded our conservative estimates but missed the consensus” due to “excessive” gross margin expectations, Needham wrote in a note Thursday.
Read more: TSMC Boosts Selling Prospects, Affirming Global Chip Pivot Role
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