TSMC Faces Market Slump Amid Strong Earnings and Trump's Comments

TSMC, a leading chipmaker, is projected to report robust quarterly earnings despite a market slump influenced by comments from Donald Trump. The company's stock and Taiwan's broader market have been impacted, though second-quarter profits are expected to leap. Investor concerns persist about U.S. government pressure on exports to China.

TSMC, the dominant maker of chips used in artificial intelligence (AI) applications, is poised to report significant quarterly earnings on Thursday, despite a 4% slide in its Taipei shares following comments from Donald Trump regarding the industry. Trump's assertion that Taiwan 'took about 100% of our chip business' and should compensate the U.S. for defense has added pressure.

TSMC's American Depository Receipts dropped 8% on Wednesday, although a 30% rise in second-quarter profit is anticipated later on Thursday. The Taiwan market also dipped 2% early Thursday. With clients like Apple and Nvidia, TSMC has thrived amidst the AI surge.

SmartEstimates from 21 analysts predict TSMC will report a net profit of T$238.8 billion ($7.33 billion) for the quarter ended June 30. This estimate vastly surpasses the T$181.8 billion profit reported in 2023's second quarter.

Last week's revenue report in Taiwan dollars also surpassed market expectations, with guidance for third-quarter revenue to be provided in U.S. dollars. Concerns over the U.S. government's potential tighter restrictions on exports to China impacted shares in ASML, TSMC's significant supplier.

Investor apprehensions have overshadowed second-quarter earnings from Europe's largest tech company, despite results exceeding forecasts. During its earnings call on Thursday at 0600 GMT, TSMC will update its quarterly and full-year outlook and capital expenditure plans, including billion-dollar factory projects in Arizona, USA, while keeping core manufacturing in Taiwan.

TSMC, investing heavily in advanced technologies, maintained its capital spending guidance between $28 billion and $32 billion for this year, similar to last year's $30.45 billion. As AI drives up shares in TSMC, the company remains a vital pillar in Taiwan's export-reliant economy, despite challenges from Intel and Samsung.

(With inputs from agencies.)