TSMC ADRs outperform U.S. stocks on record 2024 sales

Taipei, Jan. 11 (CNA) American depository receipts (ADRs) of contract chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC) outperformed the hard-hit United States markets on Friday, soaring in the wake of record high sales in 2024, analysts said.

TSMC's ADRs rose 0.60 percent on the U.S. markets, where the Dow Jones Industrial Average plunged almost 700 points, or 1.63 percent, and the tech-heavy Nasdaq index dropped more than 1.6 percent, after a better-than-expected jobs report in the U.S. in December dampened expectations of future interest rate cuts by the Federal Reserve.

Speaking with CNA on Saturday, Chen Yi-kuan (陳奕光), chairman of First Capital Management, said the resilience of TSMC's ADRs largely reflected its strong sales in 2024, as the market remained upbeat about the company's earnings outlook.

TSMC's consolidated sales for 2024 hit a record high of NT$2.89 trillion (US$87.68 billion), up 33.9 percent from a year earlier, according to a report released by the company Friday in Taipei.

At an investor conference last October, TSMC had projected an annual sales growth of just under 30 percent for 2024, in U.S. dollar terms.

On Saturday, Tony Huang, an analyst with Taishin Securities Investment Advisory, said investors are highly optimistic that TSMC will give positive leads at its next investor conference on Jan. 16. Investors also expect the company to offer higher dividends, given its growing bottom line, he said.

TSMC has started production of advanced 4-nanometer chips at its fab in Arizona for U.S. customers, according to a Reuters report Friday, which cited U.S. Secretary of Commerce Gina Raimondo. She also said it was a milestone in the semiconductor efforts of U.S. President Joe Biden's administration, according to the report.

TSMC has not been making any public comments about its Arizona fab, ahead of its investor conference on Jan. 16.

According to Chen, however, there are some fears that higher operating costs at TSMC's Arizona fab would affect the company's gross margin -- the difference between revenue and cost of goods sold.

Meanwhile, Huang said TSMC will give guidance for 2025 at its upcoming investor conference, which would reveal how production in Arizona might affect the company's gross margin.

He expressed confidence in the chipmaker, however, saying that it has strong fundamentals, which means the impact of the Arizona production could be limited.

TSMC, which dominates the global high-end chip market, is investing US$65 billion in Arizona, with the goal of establishing three advanced wafer fabs there.

On Nov. 15, 2024, the U.S. Department of Commerce announced that it had signed a final agreement with TSMC to provide US$6.6 billion in direct funding to the company, under the CHIPS Incentives Program for Commercial Fabrication Facilities.