Chipmaker Taiwan Semiconductor (NYSE:TSM) is requesting deliveries from its chipmaking equipment suppliers to be delayed. This is due to apprehensions about customer demand, according to Reuters.
TSM has been witnessing delays at its multi-billion-dollar chip facility in Arizona. The company is looking to control costs while remaining cautious about the demand outlook. Earlier in July, the company’s CEO, C. C. Wei, highlighted key factors such as a tepid recovery in China, a soft end market, and a weak economic scenario. This combination is keeping customers on their toes.
TSM is a key producer of chips for NVIDIA, and the demand for AI chips remains robust. However, other end markets, including mobiles, laptops, and automotive, are proving to be sluggish.
The company has postponed manufacturing at its Arizona plant until 2025 and anticipates a 10% decline in its top line for 2023. Additionally, broader market challenges are expected to result in a 4% drop in its operating margin in the current quarter.
Despite these challenges, TSM is gradually making a slew of investments as well. The company has invested $100 million in Arm Holdings’ (NASDAQ:ARM) IPO and recently picked up a 10% stake in Intel’s (NASDAQ:INTC) IMS Nanofabrication business.
Overall, the Street has a consensus price target of $125 on TSM, alongside a Moderate Buy consensus rating. This points to a substantial 36.7% potential upside in the stock.
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