Taiwan Semiconductor Manufacturing Company (TSMC) reported a third-quarter profit of 211 billion New Taiwan dollars ($6.69 billion) on Thursday amid weak demand for consumer electronics. Despite the second straight quarter of profit declines, TSMC exceeded analyst expectations.
In terms of revenue, TSMC generated 546.73 billion New Taiwan dollars ($17.28 billion), surpassing the estimated 540.39 billion New Taiwan dollars. Net income also exceeded expectations, with TSMC recording 211 billion New Taiwan dollars compared to the projected 191.43 billion New Taiwan dollars.
However, TSMC’s revenue decreased by 10.83% from the previous year to 546.73 billion New Taiwan dollars, and net income fell by 24.87% to 211 billion New Taiwan dollars. This is in line with TSMC’s guidance for third-quarter revenue between $16.7 billion and $17.5 billion.
TSMC attributed the support for its business to the strong ramp of its industry-leading 3-nanometer technology and the increased demand for 5-nanometer technologies. The company also mentioned customers’ ongoing inventory adjustment as a partial offset.
During the earnings call, TSMC CEO C.C. Wei stated that inventory digestion is expected to continue in the fourth quarter due to weaker macroeconomic conditions and slow demand recovery in China. However, Wei noted some early signs of demand stabilization in the PC and smartphone market.
As the top producer of the world’s most advanced processors, TSMC manufactures semiconductors for companies like Apple and Nvidia, which are based on Arm architecture. TSMC currently manufactures 3-nanometer chips and plans to begin mass production of 2-nanometer chips in 2025.
The global smartphone market showed a slight decline of just 1% in the third quarter of 2023, indicating a slowdown in its decline compared to the second quarter, where it plummeted 11%. Canalys attributed this growth to regional recoveries and new product upgrade demand.
Although the demand for AI chips has surged, driven by the popularity of large language models, TSMC’s CEO Wei stated that it is not enough to offset the weakening demand for chips in consumer electronics. TSMC expects its fourth-quarter revenue to range between $18.8 billion and $19.6 billion.
In recent news, the U.S. extended TSMC’s exemption from trade sanctions on China, enabling the company to continue shipping advanced chip equipment for its operations in China.
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