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Taiwan Semiconductor Manufacturing Company remains bullish on global chip demand

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Yahoo Finance Live anchors discuss Taiwan Semiconductor Manufacturing Company’s bullish call on the global chip demand.

Video Transcript


BRIAN SOZZI: Welcome back to "Yahoo Finance Live." we're watching right here this morning, besides the big bank earnings, Taiwan Semiconductor, hottest ticker on the Yahoo Finance platform. And Julie, I'd say a mixed earnings day for Taiwan Semi. On one part, they're raising their sales outlook to mid-30% growth. Previously, they were about 30%.

Citi is out here, reaffirming their buy rating or bullish rating on Taiwan Semi after this. But they are warning about their CapEx outlook.

JULIE HYMAN: Yes, they are. They're talking about cutting spending on expansion by as much as 9%. And the commentary from the CEO CC Wei is quite interesting here. He says, we expect our customers will start to take action to decrease their inventory level a few quarters at least into the first half of 2023, they'll continue to do an inventory correction.

He says for now, demand continues to exceed our ability to supply. We expect our capacity to be tight through the end of this year. So it sounds like next year, there could be-- we've seen this inventory buildup starting to happen in some other areas. It seems to be happening, as evidenced by the retailers in areas like home goods, for example. Starting to happen in consumer electronics, which then could have, eventually, a knock-on effect for TSMC.

BRIAN SOZZI: Well, we've seen a lot of downgrades come into this space within that real hardware side of the market, whether it's PCs-- I believe HP caught a downgrade a couple of weeks ago, Nvidia this morning. Some more cautious commentary on that stock from the folks at Bear. That comes after yesterday, I believe, Citi out with cautious comments, trimming their estimates on Nvidia.

So look, certainly a thesis that makes sense to me. This inventory correction in chips may have only just started.

JULIE HYMAN: At the same time, it's interesting here. There's also a report out from Nikkei this morning that Intel is informing customers that it's going to be raising prices on most of its products in the fall and that those increases are going to range from the single digits to more than 10% and 20% in some cases. All of that according to Nikkei. So there's that happening.

In other words, it's not a very clear picture still. And at the same time, you've got this big push here in the US to have new legislation when it comes to the semiconductor industry. And speaking of Intel, they're waiting to break ground on a plant in Ohio. Obviously, that's not going to be producing chips this year.

BRIAN SOZZI: Yeah, the CEO Pat Gelsinger put out a tweet on this one. Look, he wants to start the shovels. He wants to start building these this $20 billion plant in Ohio. He's just not going to do it. He wants to see this act passed. And I can't blame him.

JULIE HYMAN: Right. He's been tweeting about it. The industry groups have been talking about that semiconductor bill. It sounds--

BRIAN SOZZI: He wants to create jobs.


BRIAN SOZZI: 1,000 jobs.

JULIE HYMAN: Yes. He wants to create jobs, but he wants to--

BRIAN SOZZI: Well, then to make money.


Yeah, let me just follow my sentence there. You have to make money, yes.

JULIE HYMAN: And there's talk about separating that chip bill from some other legislation in order to try and get it through. But there doesn't seem to be imminent movement on that at this point.