A man walks past TSMC’s logo at the company’s headquarters in Hsinchu, Taiwan.
Sam Yeh | AFP | Getty Images
Taiwan Semiconductor Manufacturing Company reported a third-quarter profit of 211 billion New Taiwan dollars ($6.69 billion) on Thursday as weak demand for consumer electronics persists. While that was the second straight quarter of profit declines, the world’s largest contract chipmaker exceeded analyst expectations.
Below are TSMC’s third-quarter results compared to Refinitiv consensus estimates:
- Revenue: 546.73 billion New Taiwan dollars ($17.28 billion), vs. NT$540.39 billion expected
- Net income: NT$211 billion, vs. NT$191.43 billion expected
TSMC’s revenue declined by 10.83% from a year ago to NT$546.73 billion, and net income fell by 24.87% from a year ago to NT$211 billion. This is in comparison to TSMC’s guidance for third-quarter revenue between $16.7 billion and $17.5 billion.
“Our business was supported by the strong ramp of our industry-leading 3-nanometer technology and higher demand for 5-nanometer technologies, partially offset by customers’ ongoing inventory adjustment,” said TSMC in its earnings report.
The chip giant also stated that revenue increased by 13.7% in the third quarter compared to the second quarter.
In the second quarter, the Taiwanese firm reported a decline in quarterly profit for the first time in four years due to a post-pandemic plunge in the demand for consumer electronics like smartphones and laptops. However, analysts have predicted that inventories at smartphone and computer makers are depleting and restocking demand is expected to rise.
TSMC is the leading producer of the world’s most advanced processors. The Taiwanese company manufactures semiconductors for companies such as Apple and Nvidia, which often use Arm architecture.
TSMC currently manufactures 3-nanometer chips and plans to start 2-nanometer mass production in 2025.
Smartphone market recovery
According to Canalys data, the global smartphone market only declined by 1% in the third quarter of 2023, indicating a slowdown in its decline. In the second quarter, the market plummeted by 11% compared to the same period last year.
“Due to regional recoveries and increased demand for product upgrades, the smartphone market experienced double-digit sequential growth in Q3, preceding the sales season,” stated Canalys in a report released on Tuesday.
The demand for AI chips, driven by the proliferation of large language models such as ChatGPT and Chinese clones, has significantly increased. This has contributed to the surge in TSMC’s shares, which have risen by 19% this year.
Last week, the U.S. extended TSMC’s exemption from trade sanctions on China, allowing the company to continue shipping advanced chip equipment to its operations there.
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