TSMC earnings report Q3 2023

Taiwan Semiconductor Manufacturing Company reported a third-quarter revenue of 211 billion New Taiwan {dollars} ($6.69 billion) on Thursday as weak demand for shopper electronics persists. Whereas that was the second straight quarter of revenue declines, the world’s largest contract chipmaker bested analyst expectations.

Listed here are TSMC’s third quarter outcomes versus Refinitiv consensus estimates:

• Income: 546.73 billion New Taiwan {dollars} ($17.28 billion), vs. NT$540.39 billion anticipated
• Web revenue: NT$211 billion, vs. NT$191.43 billion anticipated

TSMC reported income slipped 10.83% from a yr in the past to NT$546.73 billion, whereas web revenue fell 24.87% from a yr in the past to NT$211 billion. That compares with TSMC’s steerage for third-quarter income between $16.7 billion and $17.5 billion.

“Our enterprise was supported by the sturdy ramp of our industry-leading 3-nanometer know-how and better demand for 5-nanometer applied sciences, partially offset by clients’ ongoing stock adjustment,” mentioned TSMC in its earnings report.

The chip large mentioned that income elevated 13.7% within the third quarter as in comparison with the second quarter.

Within the second quarter, the Taiwanese agency reported a decline in quarterly revenue for the first time in four years attributable to a post-pandemic plunge within the demand for shopper electronics like smartphones and laptops. However analysts have mentioned chip inventories at smartphone and PC makers are operating down they usually count on restocking demand to come back again.

Through the earnings name on Thursday afternoon, CEO C.C. Wei mentioned that the agency expects inventories to proceed to say no.

“As a result of persistent weaker total macroeconomic situations and gradual demand restoration in China, clients stay cautious of their stock management. That is why we count on the stock digestion to proceed within the fourth quarter,” mentioned Wei.

“Having mentioned that, we’re observing some early indicators of demand stabilization within the PC and smartphone market,” he added.

TSMC is the highest producer of the world’s most superior processors. The Taiwanese agency manufactures semiconductors for firms like Apple and Nvidia, which can be usually based mostly on Arm structure.

TSMC at present manufactures 3-nanometer chips and plans to start 2-nanometer mass manufacturing in 2025.

Canalys knowledge confirmed that the worldwide smartphone market slid just 1% in third quarter 2023, pointing to a slowdown in its decline. Within the second quarter, the market plummeted 11% in contrast with the identical interval a yr in the past.

“Bolstered by regional recoveries and new product improve demand, the smartphone market recorded a double-digit sequential progress in Q3, forward of the gross sales seasons,” mentioned Canalys in a Tuesday report.

The demand for AI chips pushed has boomed led by the proliferation of huge language fashions akin to ChatGPT and Chinese language clones. That is bolstered the shares of TSMC, which have surged 19% to this point this yr.

Nevertheless, CEO Wei mentioned that AI demand is “not sufficient to offset” the weakening demand for chips in shopper electronics.

“Shifting into fourth quarter 2023, AI-related demand continues to be sturdy however it isn’t sufficient to offset the general cyclicality of our enterprise,” mentioned Wei throughout the earnings name on Thursday.

“We count on our enterprise within the fourth quarter to be supported by the continued sturdy ramp [up] of our 3-nanometer know-how, partially offset by clients’ continued stock adjustment on the stock facet,” he mentioned.

TSMC expects fourth quarter income to come back in between $18.8 billion to $19.6 billion.

Final week, the U.S. prolonged TSMC’s exemption from U.S. commerce sanctions on China, permitting it to proceed delivery superior chip gear for its operations there.