When the Chips Are Down

By Alex Eule |  Thursday, July 15 Chip Pain. Stocks slipped today, led by weakness in technology. The tech softness was triggered by an earnings report from Taiwan Semiconductor, the world's most advanced chip maker and one of its most important companies.  TSMC, as its known, actually reported better-than-expected revenue for the second quarter, helped by a global surge in chip demand. But the shortages for chips continue and TSMC said supplies would remain tight into 2022. Interestingly, the company's profitability hasn't been helped by the increased demand for its chips. TSMC said its gross margins would be about 50.5% in the third quarter, two percentage points below what Wall Street expected. (Barron's Max Cherney has more on TSMC's report here.) Margin pressures tend to worry investors, and Taiwan Semiconductor shares finished the day down 5.5%. The pain extended across the chip sector, with Nvidia, NXP Semiconductor, and Microchip Technology all down at least 4% on the day. Chips will remain in focus tomorrow: Late tonight, The Wall Street Journal reported that Intel was in talks to buy Global Foundries, a chip manufacturer, for $30 billion. That ranks as a major deal -- even for a big company like Intel. It would be the company's largest ever deal.  The chip pain weighed on the tech-heavy Nasdaq Composite, which finished the day down 0.7%. The S&P 500 was off 0.3%, while the Dow Jones Industrial Average managed to squeeze out a gain. It was up 54 points, or 0.2%.

 

DJIA: +0.15% to 34,987.02 S&P 500: -0.33% to 4,360.03 Nasdaq: -0.70% to 14,543.13 The Hot Stock: American International Group +3.6% The Biggest Loser: Teleflex -9.8% Best Sector: Utilities +1.1% Worst Sector: Energy -1.4%