The stock of semiconductor companies from Tokyo Electron Ltd. to Nvidia Corp. gained more than 160 billion US dollars in market value after Taiwan Semiconductor Manufacturing Co.'s forecasts for expenditure and revenue proved promising and increased the prospects for a broad recovery in the technology industry in 2024.
TSMC's numbers, better than expected, reinforced expectations of a recovery in demand for smartphones, chips, and computers after the industry had suffered for over a year due to the effects of Covid.
On Friday, the world's most valuable chip manufacturer rose by over 6% in Taipei - the biggest gain in almost a year - following a rise of nearly 10% in the USA. Key suppliers like Tokyo Electron and Advantest Corp. gained more than 5% in Tokyo.
Together they ensured that the value of semiconductor stocks in the USA and Asia increased by approximately 165 billion US dollars, as calculated by Bloomberg.
TSMC's outlook provided investors with much-needed security in a challenging market environment. The most significant company for Apple Inc. and Nvidia plans to invest $28 to $32 billion in tangible assets and expects revenue growth of at least 20% this year. The company's management also spent a lot of time discussing the impact of emerging artificial intelligence, which is expected to boost the industry due to its enormous computational requirements.
In Europe, semiconductor supplier company ASML Holding NV rose by 4% and led a broad regional rally that extended to US stocks such as Nvidia and Intel Corp., triggering the largest increase in the Philadelphia Semiconductor Index since December 11th.
"The trust of TSMC in the short-term fundamental data appears to have significantly improved in the last 4 to 5 months," wrote analysts from Wedbush. "We see this more optimistic outlook as being based on the acceleration of growth through an increasing contribution from artificial intelligence as well as improved expectations for traditional end-market trends in 2024."
Signs of Recovery in the Semiconductor Industry in the Last Few Weeks
Now it is implementing its plans for chip factories in Japan, Arizona, and Germany - with the first one going into mass production by the end of 2024 and meaning a significant boost for TSMC's global presence. However, uncertainty remains.
In this month, competitor Samsung Electronics Co. has released its sixth consecutive quarter with a declining operating profit, as it has been struggling with the impacts of subdued demand in its own business for smartphones and storage media. Additionally, concerns about China, the largest market for computers, smartphones, internet, and chips, cast a shadow over the industry.
Apple - long-standing important customer of TSMC - faces obstacles with the latest iPhone generation. Several analysts have lowered their expectations for Apple, and Jefferies has predicted that the sales decline in China will worsen. The US company is also affected by an increasingly extensive ban on the use of foreign devices by Chinese authorities and state-owned enterprises.
