Summary: Taiwan Semiconductor Manufacturing Company (TSMC) reported a Q3 profit of $6.69 billion, beating analyst expectations, despite weak demand for consumer electronics. TSMC’s revenue of $17.28 billion and net income of $6.69 billion surpassed estimates of $17.28 billion and $6.69 billion, respectively. The chip giant attributed its success to the strong ramp of its 3-nanometer technology and higher demand for 5-nanometer technologies. TSMC, which manufactures semiconductors for companies like Apple and Nvidia, plans to begin mass production of 2-nanometer chips in 2025. Analysts predict a recovery in smartphone market demand, which could further boost TSMC’s growth.
Taiwan Semiconductor Manufacturing Company (TSMC) has reported better-than-expected results for the third quarter despite weak demand for consumer electronics. The company recorded a profit of $6.69 billion, surpassing analyst estimates. While this represents a decline in profit for two consecutive quarters, TSMC remains the world’s largest contract chipmaker. Its revenue for the quarter was $17.28 billion, exceeding expectations of $17.28 billion. The net income was $6.69 billion, higher than the estimated $6.69 billion.
In its earnings report, TSMC mentioned that the strong performance was driven by the increased demand for its 3-nanometer and 5-nanometer technologies, offsetting the ongoing inventory adjustment by its customers. The company reported a revenue increase of 13.7% in the third quarter compared to the previous quarter.
The decline in revenue and profit is attributed to the lower demand for consumer electronics such as smartphones and laptops due to the COVID-19 pandemic. However, analysts anticipate a recovery in demand as inventories at smartphone and computer manufacturers run down and restocking starts. TSMC, which manufactures semiconductors for major companies including Apple and Nvidia, is the top producer of advanced processors. Along with its current production of 3-nanometer chips, TSMC plans to begin mass production of 2-nanometer chips in 2025.
Furthermore, there are positive signs for the smartphone market, as data from Canalys shows a slowdown in the decline of the global smartphone market. In the third quarter of 2023, the market slid by only 1%, compared to an 11% decline in the previous quarter. This recovery is attributed to regional recoveries and new product upgrade demand. These factors, along with the growing demand for AI chips, are contributing to TSMC’s success in the market. TSMC’s shares have surged 19% this year as a result. Lastly, the exemption from U.S. trade sanctions on China, which allows TSMC to continue shipping advanced chip equipment, has provided additional support to the company’s operations.
Overall, TSMC’s better-than-expected third-quarter performance, along with anticipated market recoveries, positions the company for continued growth and success.
Tags: TSMC, Q3 earnings, revenue, profit, chipmaker, semiconductors, smartphone market, consumer electronics, nanometer chips, global market