Demand for artificial intelligence chips raises red flags, TSMC's sales growth in October hits the lowest since February
Taiwan Semiconductor's sales in October increased by 29.2%, marking the lowest growth rate since February of this year, indicating weak demand for artificial intelligence chips. Although analysts expect sales to grow by 36.1% over the next three months, investors are concerned about the commercial potential of artificial intelligence. In addition, Taiwan Semiconductor has reached an agreement with American chip manufacturer GlobalFoundries to secure billions of dollars in subsidies and loans to support the construction of a factory in the United States
According to Zhitong Finance APP, Taiwan Semiconductor (TSM.US) reported a sales growth of 29.2% in October, marking the lowest growth rate since February of this year, raising concerns about the sustainability of demand for artificial intelligence chips. The company, which manufactures chips for Apple (AAPL.US) and Nvidia (NVDA.US), announced its monthly sales amounted to NT$314.2 billion (approximately USD 9.8 billion). Prior to this, from March to September, the company's sales had grown by over 30% each month. Analysts expect that in the three months ending in December, the chip manufacturer's sales will grow by 36.1%.
As the producer of most of the world's advanced chips, Taiwan Semiconductor is seen as a leader in the infrastructure development supported by artificial intelligence. With growing concerns among investors about the true commercial potential of artificial intelligence and its ability to assist people, attention to Taiwan Semiconductor's monthly sales has also increased. So far this year, Taiwan Semiconductor's stock price has risen by over 80%.
Currently, the Biden administration is working to allocate funding for U.S. factory subsidies under the CHIPS Act passed in 2022 before the end of its term in January. This week, Taiwan Semiconductor (TSM.US) and U.S. chip manufacturing leader GlobalFoundries (GFS.US) have reached binding agreements regarding billions of dollars in grant subsidies and special loans to support the construction of factories in the U.S. by these two chip manufacturing companies. The Biden team is racing against time to complete the distribution of CHIPS Act subsidies, aiming to achieve the administration's ambitious goal of "bringing chip manufacturing back to the U.S."
According to reports, preliminary agreements indicate that the subsidy plan for Taiwan Semiconductor, announced in April, includes up to USD 6.6 billion in grant subsidies and up to USD 5 billion in special loans to support the construction of three large chip manufacturing plants in Phoenix, Arizona, potentially enabling mass production of cutting-edge chips at 3nm and below in the future