MarketWatch First Take: Taiwan Semi execs slap down some frenzy for AI among chip makers, with concerns about sustainability

by | Jul 20, 2023 | Stock Market

Taiwan Semiconductor Manufacturing Corp. executives may have slapped down some of Wall Street’s euphoria over artificial intelligence, reflected in the recent runup in the stock prices of several chip makers, with cautious comments about the sustainability of the current demand for AI chips. TSMC
currently the world’s largest contract manufacturer of semiconductors, acknowledged in its earnings call with analysts that there has been strong demand for processors related to AI, especially in the data center, but they added that it is not clear how sustainable that demand will be. It also said AI would not offset the current sluggish global demand for semiconductors.

“The short-term frenzy about the AI demand definitely cannot extrapolate for the long term,” TSMC Chairman Mark Liu told analysts on a conference call. “Neither can we predict the near future, meaning next year, how the sudden demand will continue or will flatten out.” TSMC said AI related processors currently account for 6% of its revenue, but it was not enough to offset the overall macroeconomic impact of the current downturn in demand for semiconductors and is forecasting its full year revenue to be down 10%. It said that AI processor demand could grow at about 50% on a compounded annual growth rate for the next five years. The company also pushed out the pro …

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