U.S. shares of Taiwan Semiconductor Manufacturing Company (TSM) fell on Thursday — dragging the stock of its key customer, Dow component Apple (AAPL), down as well — after the chipmaker lowered its full-year revenue guidance on softer smartphone demand and uncertainty over the cryptocurrency mining market.
XTaiwan Semiconductor, also known as TSMC, dropped 5.7% to close at 39.53 on the stock market today. Shares of Apple also fell, losing 2.8% to close at 172.80.
TSMC revised its full-year revenue target to the low end of its earlier forecast. It now expects 2018 revenue to grow 10%, compared with its prior forecast of 10% to 15% growth, Reuters reported.
TSMC said it expects the global semiconductor industry to grow 5% this year, down from its earlier forecast of 5% to 7% growth. It sees revenue at contract chipmakers rising 8%, rather than 9% to 10% as previously forecast.
Taiwan Semiconductor is the world's largest contract chipmaker. Along with Apple, it makes chips for Nvidia (NVDA), Qualcomm (QCOM) and others.
Susquehanna Financial Group analyst Mehdi Hosseini reiterated his neutral rating on TSMC and lowered his price target to 36 from 39.
Apple Clearing Out Chip Inventories
"We are lowering our estimates for TSM to account for a steeper-than-expected inventory digestion by premium smartphone customers, particularly Apple," Hosseini said in a note to clients.
Apple is aggressively clearing out inventories of A11 processors in the June quarter as it prepares for new iPhone introductions using new A12 chips in the second half of the year, Hosseini said.
TSMC's March-quarter results were lower than expected. Its first-quarter revenue of $8.46 billion missed the consensus estimate of $8.48 billion. The company's earnings per U.S. share of 59 cents were below the target of 60 cents.
Nvidia tumbled 3.1% to 229.04. Qualcomm plunged 4.8% to 52.57.
Qualcomm is facing resistance from Chinese government regulators over its planned purchase of NXP Semiconductors (NXPI.)
RELATED:
Lam Research Stock Slides On Soft Chip Gear Shipment Guidance
ASML Beats First-Quarter Views, But Gross Margin Outlook Disappoints
