Now that unprecedented surge investment is fuelling fears the industry will overshoot, adding so much capacity in the years ahead as demand subsides that profits will take a hit.
Management cautioned that it couldn’t anticipate whether demand is peaking or whether growth at the current levels is sustainable. “TI posted yet another puzzling earnings report. Revenue for the quarter significantly beat guidance, but it guided revenue flat, without much explanation for the conservative guidance,” said Raymond James analyst Chris Caso in a note after the report. “Our view is that management likely suffers from a lack of confidence at the macro level, despite what clearly continues to be tight supply conditions at both TI and the semi industry at large.
The entire chip industry is cranking up investments to meet the surging demand. Taiwan Semiconductor Manufacturing Co, the world’s top chipmaker, has pledged to invest US$100bil over three years, including in a new fab in the US. South Korea’s Samsung Electronics Co and SK Hynix Inc will lead more than 510 trillion won of investment in semiconductor research and production in the years to 2030 under a national blueprint devised by President Moon Jae-in’s administration.