Is TSMC worried that equipment manufacturers will delay delivery due to demand?Foreign investment: old news, buy on dips | TechNews Technology News

Market rumors suggest that TSMC is asking chip equipment manufacturers to postpone delivery due to concerns about customer demand, causing European and American chip stocks to fall. However, analysts believe that this is no longer news, and the pullback in chip equipment stocks has created buying opportunities.

Reuters exclusively reported on the 15th, citing unnamed sources, that TSMC has asked important suppliers to delay the delivery of high-end chip manufacturing equipment due to growing concerns about customer demand. Suppliers currently predict delays will be short-lived. In this regard, TSMC only stated that it would not respond to “market rumors.”

According to the news, ASML Holding NV, the leader of the Dutch semiconductor equipment industry, is also affected. ASML CEO Peter Wennink revealed in an exclusive interview with Reuters last week that some high-end equipment orders have been delayed, which may be due to “short-term management” issues.

In response to the problem that TSMC was unable to recruit workers and was forced to delay the start of production of its Arizona plant until 2025, Wennink said that bringing Taiwanese workers to Arizona to build the plant would leave less manpower to build factories in other areas. It is a bit of a misfortune.

Degroof Petercam analyst Michael Roeg pointed out that although AI is beneficial to TSMC, which manufactures chips for Huida, demand is not enough to make up for the weak end markets for mobile phones, laptops, industrial and automotive chips.

TSMC ADR fell 2.43% on the news on the 15th, closing at $89.25, a new closing low since May 16. TSMC’s important customers such as Apple Inc., Nvidia Corp. and Advanced Micro Devices (AMD) also fell by 0.42%, 3.69%, and 4.82%. TSMC’s wafer foundry competitors GlobalFoundries (GF) and Intel Corp. fell 4.41% and 2.04%.

Other U.S. semiconductor equipment stocks fell simultaneously. KLA Corporation, a manufacturer of wafer inspection equipment, fell 5.35%, the largest decline among the 30 constituent stocks. Semiconductor etching machine manufacturer Lam Research Corp., semiconductor equipment industry leader Applied Materials Inc., and ASML ADR also fell 5.08%, 4.37%, and 4.06%.

ASM International, a Dutch semiconductor equipment manufacturing and materials supplier listed on the Amsterdam Exchange, and BE Semiconductor Industries NV, a Dutch semiconductor packaging equipment supplier, fell 6.60% and 4.77% respectively.

Analysts call for buying chip equipment stocks on dips

MarketWatch reported that Citi Research analyst Atif Malik issued a research report on the 15th stating that the above report is “not news” and that as long as chip equipment stocks pull back, it is a buying opportunity. “Tokyo Electron and Applied Materials have long said that the weak advanced chip market this year (2023) will be offset by mature logic IC processes.”

Malik recently pointed out at the Global Technology Forum held by Citigroup that Tokyo Power Technology revealed that some orders for advanced process equipment have been delayed by one to two quarters, while Kelei said that mature process projects have received more than US$900 million in deposits.

Jefferies analyst Mark Lipacis pointed out through a research report later on the 14th before the Reuters report was revealed that the performance of semiconductor capital equipment (SCE) stocks is closely related to advanced packaging. He believes that through advanced packaging, the number of chips installed in notebook central processing units (CPUs) will increase from 9 million data center CPUs/graphics processing units (GPUs) in 2023 to 90 million in 2024. In this way, generative AI and large language models (LLMs) can be supported.

Lipacis pointed out that if LLMs can also be inferred through smartphones, the total addressable market (TAM) of advanced packaging is expected to grow an additional 10 times. It is estimated that it will be realized as soon as 2025. By then, the number of high-end smartphones will 550 million units, TAM is approximately US$1.3 billion. He said that Applied Materials, Kelei, Kelin, Camtek Ltd., Onto Innovation Inc. and Disco Corp. are still the top picks.

(This article is reprinted with permission from MoneyDJ News; first image source: shutterstock)