Intel, Taiwan Semiconductor, and Micron Stocks Experience Decline in Value Today

Intel, Taiwan Semiconductor, and Micron Stocks Experience Decline in Value Today

NvidiaIt is (NASDAQ:NVDA) The Global Technology Conference 2024 (GTC 2024) kicked off on Monday, full of “sizzle and substance” (said Bank of America), but offering “no big surprises” (according to Morgan Stanley). Investors who were hoping for more are now modestly selling Nvidia shares — down 2.2% through 11 a.m. ET — Tuesday morning. And they’re not the only ones selling.

Semiconductor manufacturing in Taiwan (NYSE:TSM) the stock is also down 2.2% today, and IntelIt is (NASDAQ:INTC) by 2.6%. Micron (NASDAQ:MU)who grouped his high bandwidth memory chips with artificial intelligence (AI) chips that Nvidia sells also suffered a drop of 1.5%.

There may be two reasons for this.

Everything about AI starts with Nvidia

Nvidia has become the standard bearer and leader in the AI ​​chip industry, so let’s start there.

As reports, Nvidia last night offered a “series of product and partner announcements” and laid out plans to expand the role of AI in services, robotics and the omniverse (the artist formerly known as Metaverse). What is Nvidia doesn’t However – and what investors apparently hoped for would be do – updates its assessment of the total addressable market (TAM) size for AI chips. This means that there will be no further increase in potential Nvidia chip sales worldwide, but also no increase in TAM for Taiwan Semiconductor, Intel or Micron (at least according to Nvidia).

This is likely the number one reason why semiconductor stocks are performing poorly on Tuesday morning. But the second reason may be related.

What’s wrong with Arizona?

In the cases of Intel and Taiwan Semiconductor, investors have a second reason to worry. As Nikkei Asia reports today, five Intel and TSMC suppliers have delayed the construction of their own facilities in Arizona, which were intended to support the construction of new Intel and TSMC semiconductor factories.

Suppliers LCY Chemical, Solvay, Chang Chun Group, KPPC Advanced Chemicals and Topco Scientific blame the delays on the high cost of construction, labor and finding workers to build their factories, as well as Intel and TSMC themselves, which are slowing down their development. from their own factories in Arizona. TSMC, for example, postponed the start of mass production at its Arizona factory from 2024 to 2025.

How bad is this news for Intel, Taiwan Semiconductor Company and Micron? Add to that the fact that Nvidia hasn’t increased its AI TAM estimate, and it seems a bit worrying for Intel and TSMC. And at least one of the suppliers – LCY Chemical – is also a supplier to Micron and its high-bandwidth memory chips.

Still, I wouldn’t worry Also a lot about the current sale of semiconductors. On the one hand, a $1 trillion TAM for AI chips is still pretty damn big. And as big as Nvidia is, it still sells for under $61 billion in all kinds of chips last year.

Furthermore, according to Nikkei, it is faster to build chemical supply plants for chipmakers than for the semiconductor manufacturing plants they serve. If demand for AI chips increases as expected and Intel and TSMC resume the construction schedule for their Arizona factories, suppliers could likely still complete their own factories in time to supply them before operations begin.

While today’s news is worth watching in case things get worse, I don’t think it poses a huge risk to semiconductor stocks in the long term.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Bank of America, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short May 2024 $47 calls on Intel. The Mad Motley has a disclosure policy.

Why stocks of Intel, Taiwan Semiconductor and Micron all fell today was originally published by The Motley Fool

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