By Adam Clark
Nvidia shares were rising on Thursday. Positive news about demand for artificial-intelligence chips from Taiwan Semiconductor Manufacturing was helping.
Nvidia shares were up by 1.7% at $855.24, recovering from a brief loss that came as the market opened.
The stock closed down 3.9% on Wednesday on a bad day for the semiconductor sector overall after chip-making equipment supplier ASML Holding said first-quarter orders were below expectations.
The latest news about the industry came from Taiwan Semiconductor Manufacturing, the world's largest contract chip maker and a key manufacturer of Nvidia's chips. The picture on demand was more reassuring, although the company also raised concerns about prices. TSMC said Thursday that its first-quarter revenue was boosted by demand for AI chips.
The Taiwanese company's CEO said AI-related chips should grow to account for more than 10% of TSMC's total revenue this year, increasing to 20% by 2028, according to The Wall Street Journal. It expects that AI-related revenue -- the category includes Nvidia's specialty of graphics-processing units for data centers, as well as AI accelerators and central processing units -- will grow at a 50% annual compound growth rate through to 2028.
"In our view, it is a positive for the whole AI semiconductor complex as TSMC sees an even longer runway for the hyper-growth of AI," wrote Needham analyst Charles Shi in a research note.
TSMC management confirmed plans to double its advanced chip-packaging capacity, called CoWoS, by the end of 2024, but said they wouldn't be able to fully relieve a current shortage of capacity until next year. CoWoS is needed to make Nvidia's highest-performing AI chips.
One potential downside for Nvidia is that TSMC strongly hinted on a call with analysts that it would have to raise prices, according to Shi. That could be related to its $65 billion buildout of chip-manufacturing plants in Arizona. TSMC founder Morris Chang has warned it might cost at least 50% more to make chips in the U.S. compared with Taiwan. Nvidia has said it expects to eventually source chips from TSMC's U.S. facilities.
Among other chip makers, Advanced Micro Devices was up 0.2% and Intel was down 1%.
Nvidia shares had risen 70% so far this year through to Wednesday's close. That compares with a 5.3% rise in the S&P 500 index and a 4.5% gain in the Nasdaq Composite Index over the same period.
Write to Adam Clark at adam.clark@barrons.com
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(END) Dow Jones Newswires
April 18, 2024 11:14 ET (15:14 GMT)
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