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TSMC Shares Tumble As Margin Concerns Outweigh Strong Demand

  • Third-quarter margin guidance a disappointment: Morgan Stanley
  • Chipmaker said sales will rise more than 20% in 2021
The Taiwan Semiconductor Manufacturing Co. headquarters in Hsinchu, Taiwan.
Photographer: Billy H.C. Kwok/Bloomberg
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Taiwan Semiconductor Manufacturing Co. shares dropped the most in more than four months after its gross margins disappointed investors who had banked on the chipmaker to benefit from the ongoing chip shortage.

The stock sank 4.1% in Taipei trading Friday, snapping four days of gains. Gross margin for the second quarter was 50%, below the roughly 51% average predicted by analysts, in part because of the appreciation in the Taiwan dollar during the period. For the September quarter, TSMC forecast gross margin of 49.5% to 51.5%. Analysts from Morgan Stanley called the third-quarter guidance a “disappointment,” warning that gross margins could fall below 50% as early as next year.