TSMC investor conference closely watched for IC market outlook

Taipei, Oct. 12 (CNA) An investor conference scheduled by contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) for Oct. 17 will be watched closely for more clues about the outlook of the global IC market, according to analysts.

Analysts said what TSMC says at the investor conference is expected to dictate the movements of tech stocks in the global market.

Optimism among investors toward the guidance expected to be given by TSMC, the world's largest pure play wafer foundry services provider, has pushed up TSMC shares on the local main board in recent sessions. As a result, the stock has driven gains on the Taiex, the weighted index on the Taiwan Stock Exchange.

On Friday, TSMC shares rose 2.54 percent to close at NT$1,045.00 (US$32.45) on the local main board and the stock's gains contributed more than 200 points to the Taiex, which rose 242.56 points, or 1.07 percent, to end at 22,901.64.

On U.S. markets, TSMC's American depositary receipts also rose 2.59 percent to end at US$190.6 overnight, moving closer to a new closing high of US$192.79 seen in early July.

In the week, the Taiex rose 598.93 points, or 2.69 percent with TSMC, the most heavily weighted stock on the local market, soaring 6.96 percent and the semiconductor sub-index surging 6.05 percent, the largest gains among major industries on the main board.

Last week, the market capitalization of the local main board rose NT$1.91 trillion from a week earlier to NT$73.23 trillion.

In a recent interview with CNA , Liu Pei-chen (劉佩真), a researcher at the Taiwan Industry Economics Database of the Taiwan Institute of Economic Research (TIER), said she expects TSMC's sales momentum to continue into the fourth quarter of this year on the back of an increase in orders from Apple Inc., which unveiled the newest iPhone 16 models using TSMC's advanced chips, as well as from artificial intelligence chip designer Nvidia Corp. and smartphone IC designers MediaTek Inc. and Qualcomm Inc.

The upcoming investor conference will focus on whether TSMC will upgrade its sales forecast for 2024, providing a better understanding of demand for high-end processes, Liu said.

The chipmaker has forecast its sales will grow 24-26 percent from a year earlier in 2024 in U.S. dollar terms, topping the expected 10 percent growth in sales for the global semiconductor industry as a whole, excluding the memory chip segment.

In the third quarter of this year, TSMC posted NT$759.69 billion in consolidated sales in the July-September period, up 12.8 percent from a quarter earlier and up almost 39 percent from a year earlier.

The figure beat TSMC's earlier estimate of between US$22.4 billion and US$23.2 billion, converted to NT$728 billion to NT$754 billion in Taiwan dollar terms based on an exchange rate of NT$32.50 the chipmaker used to make the forecast.

In the first nine months of the year, TSMC's consolidated sales rose 31.9 percent from a year earlier to NT$2.03 trillion.

Liu said investors have also kept a close eye on TSMC's global expansion as its first Kumamoto fab in Japan is scheduled to start commercial production in the fourth quarter, and the first plant in the U.S. state of Arizona will begin mass production in the first half of next year.

Investors want to hear how TSMC has secured orders at its overseas bases from clients there, she said

Earlier this week, international news media reported American chip designer Advanced Micro Devices, Inc., is set to become the second client of TSMC's Arizona facility after consumer electronics giant Apple Inc.

At home, TSMC is developing the sophisticated 2 nanometer process, which is expected to start mass production in 2025, with investors looking for comments about the progress of the development, Liu said.

TSMC is also developing the A16 process, an upgraded version of the 2nm process, and those efforts are expected to be a focus of the investor conference. Mass production of the A16 process is scheduled for the second half of 2026, Liu added.

Analysts said investors will also pay close attention to TSMC's planned capital expenditure in 2025 as how the chipmaker plans its capex will reflect market demand. In July, TSMC said its capex for 2024 is expected to be between US$30.0 billion and US$32.0 billion, up from an estimate of US$28.0 billion to US$32.0 billion made in April.

With demand for AI applications robust, TSMC's advanced 3D Chip-on-Wafer-on-Substrate (CoWoS) IC packaging services have been in high demand, analysts said, and how the chipmaker's CoWoS expansion plan proceeds is expected to also be spotlighted at the investor conference.

TSMC has taken the lead over its peers in advanced process development, and continues to enjoy solid demand, but chipmakers in the mature market have still come under pressure at a time of demand weakness, Liu said.