The world’s most valuable chip manufacturer, Taiwan Semiconductor Manufacturing Co. (TSM stock), dramatically signaled problems for the technology sector by slashing its 2022 capital investment plan by around 10%.
TSMC (TSM stock) Cuts Spending
According to Taiwan Semiconductor Manufacturing Co. ( NYSE:TSM ) , it would spend less on capital equipment in 2022 than it did—approximately $36 billion. The drastic cut in spending suggests the Taiwanese company is preparing for a wider-than-anticipated slowdown, which is a crucial signal of its expectations for development across industries, from smartphones to servers and electric vehicles.
The broad constraints Washington has placed on doing business with China are causing shockwaves throughout the world’s semiconductor sector, which TSMC and its competitors are currently battling. While Intel Corp. is said to be getting ready to dismiss hundreds of employees, the top manufacturer of chip-making machinery Applied Materials Inc., cut its prediction for the fourth quarter . Shares of TSMC’s largest client, European gear manufacturer ASML Holding NV, dropped as much as 3% on Thursday.
The Biden administration has made its most aggressive efforts yet to prevent China from acquiring technology capabilities that it views as a threat. The moves, which have angered Beijing, pose a threat to the global economy, which is already coping with a looming global recession, skyrocketing inflation, and persistent supply bottlenecks.
According to Bloomberg Intelligence analyst Charles Shum, “the company’s 10% reduction in full-year capital investmen...
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