Taiwan Semi and Intel Hit Roadblocks in Arizona - High Costs and Labor Shortages Challenge Chip Supply Ambitions
Portfolio Pulse from Anusuya Lahiri
Taiwan Semiconductor Manufacturing Co (TSM) and Intel Corp (INTC) face construction delays in Arizona due to high costs and labor shortages, impacting their efforts to strengthen the U.S. semiconductor supply chain. Suppliers like LCY Chemical and Solvay have paused or downscaled their plans, citing increased expenses and operational challenges. This situation reflects broader issues in expanding the U.S. chip supply, with costs significantly higher than in Asia. TSMC and Samsung are also adjusting their global expansion strategies due to these challenges. TSMC's stock has risen 52% due to the AI boom, with exposure available through ETFs like SOXX and CWI.
March 19, 2024 | 11:32 am
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NEGATIVE IMPACT
Intel Corp faces similar challenges as TSM in Arizona, with construction delays from high costs and labor shortages affecting its semiconductor supply chain ambitions.
Intel's involvement in the Arizona project and the encountered delays due to high costs and labor shortages could negatively impact investor sentiment in the short term, as it signals potential setbacks in its supply chain expansion strategy.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 80
NEUTRAL IMPACT
The SPDR MSCI ACWI Ex-US ETF (CWI) offers another avenue for investors to gain exposure to TSMC, potentially affected by the semiconductor industry's dynamics.
Given CWI's exposure to TSMC, the ETF might experience indirect impacts from the challenges TSM faces in Arizona. However, the broader diversification of CWI across various international stocks may mitigate the direct impact of TSMC's situation on the ETF's performance.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 60
NEUTRAL IMPACT
Investors can gain exposure to TSMC through the iShares Semiconductor ETF (SOXX), which may be influenced by TSM's performance and the broader semiconductor industry's challenges.
As SOXX includes TSMC in its holdings, the ETF could see mixed impacts from TSM's challenges in Arizona. The negative aspects of the delays might be balanced by TSMC's strong performance due to the AI boom, affecting SOXX's performance in the short term.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
TSM faces delays in Arizona due to high costs and labor shortages, impacting its U.S. expansion plans. Despite these challenges, TSMC's stock has gained 52% last year, buoyed by the AI boom.
While the construction delays in Arizona present challenges to TSM's expansion plans, the company's significant stock gain due to the AI boom suggests a balanced short-term impact. The delays may concern investors, but the strong performance driven by AI demand could offset negative perceptions.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90