TSMC shares fall sharply amid Nasdaq plunge, despite strong earnings

TAIPEI (Reuters) -Taipei-listed shares of TSMC ended 3.5% lower on Friday, dragged down by continuing geopolitical concerns and overnight losses on U.S. markets, despite the chipmaker posting strong earnings and giving an upbeat revenue outlook.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), a major Apple and Nvidia supplier and Asia's most valuable listed company, has benefited from the global artificial intelligence boom that has helped it weather the tapering off of pandemic-led electronics demand.

The chip industry bellwether on Thursday posted a second-quarter net profit that beat market expectations. It raised its 2024 revenue forecast to growth of slight to above the mid-20% range in U.S. dollar terms, versus a previous prediction of an increase in the low to mid-20% range.

All three major U.S. stock indexes suffered losses on Thursday, with the tech-heavy Nasdaq posting its biggest one-day drop since December 2022 and the chip sector suffering its largest daily percentage plunge since the pandemic-related shutdown panic of March 2020.

"We're concerned about the plunges of the Nasdaq and chip stocks. It's not just a short-term thing, which we see could consolidate downwards for next two to three months," said Allen Huang, a vice president at Mega International Investment Services in Taipei.

"TSMC was dragged down by that trend and Trump's comments, and its earnings did not exceed market expectations by much," he added.

TSMC's shares had been on a roll until comments published this week from U.S. Republican presidential candidate Donald Trump that accused Taiwan of stealing America's semiconductor business and said the island should pay the United States to defend it.

Taiwan's main index closed 2.3% lower on Friday, while the Taiwan dollar hit its lowest level since May 2016.

The American Depository Receipts of TSMC, the world's largest contract chipmaker, eked out a small gain on Thursday, closing up 0.4%, having risen as much as 4% earlier in the day after its earnings call.

TSMC has repeatedly said it will keep the bulk of its manufacturing, as well as research and development, in Taiwan, but it is also investing $65 billion to build three factories in the U.S. state of Arizona.

TSMC, colloquially referred to the "sacred mountain protecting the country" for its critical role in Taiwan's export-dependent economy, faces little competition, though both Intel and Samsung are trying to challenge that dominance.

(Reporting by Faith Hung; Editing by Christian Schmollinger, Ben Blanchard and Jamie Freed)