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TSMC Stock Dips 3.6% as Revenue Woes and Capacity Challenges Loom Large

Mover TrackerWednesday, Apr 16, 2025 6:43 pm ET

1min read

Taiwan Semiconductor Manufacturing Company (TSMC) has been navigating choppy waters recently, evidenced by a significant stock drop of 3.60% on April 16. This decline prompted investors to reassess the trajectory of this leading global semiconductor manufacturer, which seems to be at a crossroads with its future strategies.

A pivotal factor influencing this stock fluctuation is a recent report from JPMorgan. Their analysis suggests that TSMC's revenue projections for the next two years may face downward pressure. The potential decrease is attributed to a reduced demand for Amazon's in-house AI chips and broader macroeconomic concerns. In light of global economic slowdowns and trade policy uncertainties, TSMC may revise its 2025 revenue growth forecast from 25% to approximately 20%.

Compounding these challenges are the production capacity issues at TSMC’s wafer plant in Arizona. With supply trailing behind demand, TSMC is considering raising its foundry prices to mitigate soaring production costs. In particular, the competition for production capacity involves major tech entities like Apple, AMD, and NVIDIA. Speculations suggest that TSMC is contemplating a price hike of 30% to cover potential losses at its U.S.-based facilities.

Nevertheless, innovation and strategic expansion remain at the forefront of TSMC's efforts to maintain its market positioning. The Arizona plant, despite its capacity limitations, is ramping up to boost output. There's even an accelerated timeline for initiating production at a second Arizona facility. Additionally, TSMC aims to introduce its latest packaging technologies to meet the rising demand for U.S.-manufactured chips.

Amid these hurdles, TSMC's journey is a tapestry woven with both opportunities and risks. JPMorgan retains its "overweight" rating on TSMC, asserting that while short-term volatility exists, the long-term potential remains promising. Investors are advised to closely monitor these evolving dynamics while weighing global economic factors and geopolitical uncertainties that could impact TSMC's outlook.

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