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During the US stock market trading hours on Thursday, affected by the news that "TSMC expects the semiconductor industry to decline next year", leading companies including NVIDIA, Intel, and ASML all opened with a sharp drop. However, in the next two hours, they rose violently, and many giants with a market value of hundreds of billions of dollars rose by 10% from the opening low.

(Source: TradingView)

　　Why did the market ignore the "recession is coming" news soaring? What is the condition of the bad news given by TSMC? These two questions are also the core points of answering today's market movements.

　　TSMC: The third quarter report is bright, but the market is expected to encounter headwinds next year

　　On Thursday afternoon, Beijing time, TSMC announced its third quarterly report and held a legal meeting. As far as the financial report is concerned, a number of the company's financial indicators have hit record highs , including a profit of NT$280.9 billion, an increase of nearly 80% year-on-year, and an unprecedented gross profit margin of 60.4%.

　　However, the source of the market shock was the subsequent legal meeting. Wei Zhejia, president of TSMC, confirmed that this year's capital expenditure will be reduced from the original estimate of 40-44 billion US dollars to 36 billion US dollars , and the capital expenditure plan for next year will also be "more careful".

　　As for the overall market outlook, Wei Zhejia also expects that the semiconductor market may decline next year , and the supply chain inventory of the semiconductor industry is likely to have reached a high point in the third quarter, but the subsequent slowdown may take several quarters. At the same time, due to the decline in demand for PCs and mobile phones, capacity utilization has also slowed down , and this situation may continue into the first half of next year.

　　Also affected by the capacity utilization rate, the Kaohsiung plant, which is expected to start construction this year, has also adjusted its 7nm process expansion plan, but the more mature 28nm process will not be affected.

　　TSMC executives also made it clear that the above "bad news" is more of a short-term volatility. Wei Zhejia said that the decline in capacity utilization is not a change in structural demand, and it is expected that the demand for 7-nanometer support will pick up again in the second half of next year . At the same time, the expected industry recession will not affect the "strong" TSMC's continued growth . Compared with the entire industry, TSMC's performance fluctuations will be more stable and flexible.

　　Finally, regarding the export restriction measures of the United States, TSMC also confirmed that it has obtained a one-year license, and the overall impact is limited and controllable, and shipments from the Nanjing plant will not be affected.

　　Prosperity is not the biggest concern of the advanced semiconductor industry

　　At TSMC's legal meeting, the lithography machine leader ASML was also indirectly mentioned. Explaining the capex cut, TSMC CFO Huang Renzhao said that half of the reason is because of the medium-term plan, and the other half is because of the challenge of (production) tool delivery.

　　Affected by this, both ASML European stocks and US stocks fell sharply, with a drop of 8% at the opening of US stocks. However, with the rapid recovery of market sentiment, investors who had come back flocked to buy, just two hours. Raise Asmara. The company responded by saying it would not comment until next week's earnings report.

　　However, as an equipment supplier for semiconductor giants such as TSMC, Intel, and Samsung, the biggest difficulty in the past few years has been the accumulation of orders. In the second quarter of this year, the company set a new booking record.

　　After TSMC's voice, ING analyst Marc Hesselink said that for ASML, any decline in the semiconductor market will only have a very limited impact . The main risk in terms of revenue is that customers delay demand, but profit margins are the main risk now, the supply chain has been in a state of tension, and inflation is also pushing up module prices.