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.
October 19, 2023
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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