SUMMARY
- TSMC, the world’s leading chipmaker, witnesses a significant drop in second-quarter profit due to decreased demand for consumer electronics.
- TSMC expects to weather the downturn with robust adoption of their cutting-edge 3-nanometer technologies in the third quarter of 2023.
- Signs of recovery are emerging in the smartphone market, potentially forecasting an uptick in demand for TSMC's advanced processors.
The global tech world took notice as Taiwan Semiconductor Manufacturing Company (TSMC), the leading manufacturer of microchips worldwide, shared their second-quarter financial performance. The results showcased a significant dip in profits - a direct effect of a declining demand for consumer electronics.
While revenue for the quarter amounted to 480.84 billion New Taiwan dollars (equivalent to $15.68 billion), marginally beating expectations of NT$478.83 billion, the net income of NT$181.8 billion fell short of the expected NT$172.55 billion. These figures marked a 10% fall in revenue and a 23.3% decrease in net income compared to the same period last year.
According to TSMC, this decline in profitability can be attributed to unfavorable macroeconomic conditions leading to reduced market demand. The company, which last witnessed a quarterly net income decline in the second quarter of 2019, pointed out ongoing inventory adjustments from customers as a significant factor in the current performance.
Looking forward, TSMC's CFO Wendell Huang offered a glimmer of hope. Third quarter projections are expected to range from $16.7 to $17.5 billion, backed by the anticipated success of their 3-nanometer technologies. However, the specter of inventory adjustments remains a concern that could offset these gains.
Despite a current market slowdown, Canalys, a data insights provider, signals early signs of recovery, particularly in the smartphone market. As inventory clears and smartphone vendors make room for new launches, TSMC, a pivotal supplier to giants like Apple, might observe a surge in demand, thereby marking a return to profit growth.
WOM Money Picks
Be a part of the winning team | 81% Success Rate.