Loop Capital analyst Chris Kapsch said Taiwan Semiconductor's (TSM) below-consensus Q2 outlook and reduced full-year sales guidance is primarily due to near-term smartphone demand and seasonality, which should be considered transient. He still thinks bigger picture secular trends and drivers - including strong memory chip demand, as well as future growth tied to IoT, AI and 5G communications - remain in place. While TSMC's view for weaker than previously anticipated Q2 results increases risk for electronic chemical stocks Versum (VSM), Entegris (ENTG) and Cabot Micro (CCMP), Kapsch said he remains comfortable with his favorable views on Entegris and Cabot. He is more cautious on Versum, given more risk associated with the capital equipment cycle and his belief that its earnings growth may trail key peers. Kapsch keeps Buy ratings on Entegris and Cabot and a Hold rating on Versum.

Ansys (ANSS) announced a collaboration with TSMC (TSM) on multiphysics software for TSMC's Compact Universal Photonic Engines. COUPE is a cutting-edge Silicon Photonics integration system and Co-Packaged Optics platform that mitigates coupling loss while significantly accelerating chip-to-chip and machine-to-machine communication. TSMC COUPE, along with Ansys multiphysics solutions that are integrated with Synopsys' 3DIC Compiler unified exploration-to-signoff platform, enables the next generation of silicon photonics and co-packaged optics designs for applications in AI, datacenter, cloud, and HPC communications. The work spans multiple areas, including fiber-to-chip coupling, integrated electronic-photonic chip design, power integrity verification, high-frequency electromagnetic analysis, and critical thermal management.

Argus raised the firm's price target on TSMC to $160 from $130 and keeps a Buy rating on the shares. The analyst cites the company's Q1 earnings and revenue beat, stating that while the stock sold off on cautious company guidance for industry demand growth in 2024, the firm still expects solid company growth as inflation recedes and electronic device demand picks up. Throughout a down 2023, demand for the company's 5nm products remained strong, and TSMC has successfully ramped 3 nm node products, the firm added.