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TSMC shows fresh signs of recovery despite profit diveTSMC shows fresh signs of recovery despite profit dive

Semiconductor demand is stabilizing and the market is close to bottoming out, says TSMC CEO.

Robert Clark

October 19, 2023

2 Min Read
TSMC fab from the outside
Investors will take heart from further signs of a chip recovery.(Source: TSMC)

TSMC, the world's most advanced chip maker, has reported a 25% fall in third-quarter earnings, but the ICT sector and investors will take heart from the further signs of a recovery. 

The chip market leader's net profit of 211 billion New Taiwan dollars (US$17.3 billion) and revenue of NT$546.7 billion were ahead of the weighted forecast of $195.5 billion from LSEG SmartEstimate.

Revenue was down 10.8% over last year but was 13.7% higher than in the second quarter. TSMC's guidance of $32 billion capex for the fourth quarter, while at the lower end of the range, was higher than analysts' forecast of $30.5 billion.

CEO C.C. Wei told an earnings call that the company saw early signs of demand stabilization in its two biggest segments, smartphone and PC. 

Sales of smartphone chips grew 33% over the second quarter, with IoT sales up 24%.

"We want to say that 2024 will have very healthy growth," Wei said. However, it was too early to call a rebound, although the market was "very close" to the bottom, he said. 

First sales of 3nm

The result is the first to include sales from the new 3nm technology, contributing 6% of total revenue.  The 5nm and 7nm were the biggest segments, accounting for 37% and 16% of total sales respectively.

CFO Wendell Huang said the third-quarter result was driven by "the strong ramp of our industry-leading 3nm technology and higher demand for 5nm  technologies," while partially offset by customers' inventory adjustments.

He said continued 3nm demand would drive the fourth-quarter result, although would still be impacted by inventory adjustments. 

TSMC's stock on the Taiwan exchange closed 1.1% Thursday.

Its more positive outlook follows Samsung Electronics' improved third-quarter guidance last week. Despite forecast falls in sales and profit, it was also seen as a sign of recovering demand, helping send its stock 5% higher.

Chip industry organization Semi has also forecast a rebound next year. It says the industry recovery began earlier this year after bottoming out in the first half of 2023.

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About the Author(s)

Robert Clark

Contributing Editor, Special to Light Reading

Robert Clark is an independent technology editor and researcher based in Hong Kong. In addition to contributing to Light Reading, he also has his own blog,  Electric Speech (http://www.electricspeech.com). 

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