What happened
Shares of Taiwan Semiconductor Manufacturing (TSM -1.67%) were falling 4% in morning trading Monday at 10:37 a.m. on no company-specific news, but the stock has been on a tear so far this year, up 22% year to date.
In a notable mention last week, Apple (AAPL -2.19%) CEO Tim Cook told analysts during the tech giant's fiscal first quarter earnings conference call that the company was "all in" on being Taiwan Semiconductor's largest customer at its new Arizona facilities.
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So what
Although Taiwan Semiconductor has been able to sidestep many of the supply chain snags that have embroiled other leading chipmakers, its own latest earnings report had the world's leading pure-play foundry saying weakening consumer demand could result in first-quarter revenue dropping as much as 5%, leading to cuts in this year's capital expenditures compared to a year ago.
Where last year the chip industry was still grappling with a chip shortage, this year there is a glut of chips on the market. It comes as manufacturers work to respond to the shortage, but also as fears of a recession brought on by inflation, rising interest rates, and persistently elevated energy prices sap consumer demand for new technology.
Now what
Taiwan Semiconductor still sees itself as coming out ahead and stealing market share this year. CEO C. C. Wei foresees the chip industry as a whole falling in 2023, but Taiwan Semiconductor growing. The chipmaker continues its push for global expansion, including the two facilities in Arizona. One is expected to become operational next year, the second in 2026.
