The shine has worn off the tech sector. Bellwether Taiwan Semiconductor Manufacturing, the world’s largest contract chipmaker, has added to the gloom. On Thursday it forecast its sharpest quarterly revenue fall in a decade, underlining worries about smartphones sales and flagging global growth.
Investors are relying on TSMC’s technological prowess to pull it through. This year could be difficult. TSMC expects smartphone launches to drive a recovery in the second half. If they flop, high performance computing, its second-largest business, will not make up the slack. The collapse in the bitcoin price has undermined demand for cryptocurrency mining chips.
Even before Thursday, worries about peak iPhone and the trade war had hit the share price. It has fallen 16 per cent since October, compared with 11 per cent for the Taiwan market index. But the shares are still highly rated. They trade on 17 times next year’s earnings. That is more than twice Samsung’s multiple, and well above those of Intel and Apple.