TSMC Expected to Report 23% Drop in Q4 Profit

Taiwan Semiconductor Manufacturing Co Ltd (TSMC) is projected to report a 23% drop in fourth-quarter profit on Thursday. Analysts attribute the expected decline to a strong performance in 2022 when the company benefited from pent-up post-pandemic demand. 

TSMC, the world’s largest contract chipmaker, is poised to announce a net profit of T$226.4 billion ($7.21 billion) for the October to December period, marking its third consecutive quarter of profit decline compared to the year-ago figure of T$295.9 billion.

Revenue Exceeds Expectations Despite Global Semiconductor Demand Dip:

Despite the anticipated decline in profit, TSMC’s revenue for the final three months of 2022 reached T$625.5 billion ($20.10 billion), exceeding both the company’s and the market’s expectations. 

The dip in global demand for semiconductors in the latter half of 2022 is expected to rebound, with analysts noting that inventories at smartphone and computer manufacturers are decreasing, and restocking demand is likely to pick up.

Focus on TSMC’s 2023 Outlook:

Analysts are closely watching TSMC’s outlook for 2023. Fubon Securities analysts expressed optimism, stating that Apple wafer demand remains steady in the short term. 

While a seasonal slowdown is expected in the first quarter of 2023, analysts have not observed additional order cuts. 

KGI Securities anticipates TSMC’s first-quarter sales outperforming typical slow-season seasonality, projecting mid-20% top-line growth in U.S. dollar terms for the full year. 

Analysts cite demand recovery and silicon content driven by 5G and high-performance computing applications as contributing factors.

AI Boom and Share Performance:

The AI boom has contributed to a surge in TSMC’s share price, making it Asia’s most valuable company. TSMC’s Taipei-listed stock rose by 32% in 2023, outpacing the broader market’s 27% gain.

TSMC is scheduled to report its financial results at 0600 GMT on Thursday, focusing on the company’s expectations for growth in 2023 amid the evolving landscape of semiconductor demand.