🔮 Better than the Oracle? Our Fair Value found this +42% bagger 5 months before Buffett bought itRead More

TSMC Q3 Income Surpasses Estimates, Production Capacity Stretched Until 2024

Published 19/10/2023, 08:00
© Reuters.
NVDA
-
TSM
-

Taiwan Semiconductor Manufacturing Company (TSMC), a leading global contract chipmaker, reported a Q3 net income of NT$211 billion ($6.69 billion) on Thursday, surpassing analyst forecasts despite consecutive quarters of profit declines. The firm's revenue for the period was NT$546.73 billion ($17.28 billion), exceeding the projected NT$540.39 billion, but marking a year-on-year decrease of 10.83%. Net income fell by 24.87% compared to the same period last year.

This performance was bolstered by the successful ramp-up of TSMC's industry-leading 3-nanometer technology and increased demand for 5-nanometer technologies. This offset customer inventory adjustments in the wake of a post-pandemic slump in consumer electronics demand, leading to a revenue increase of 13.7% compared to Q2.

As per InvestingPro Data, TSMC's market capitalization stands at a robust 441.09B USD with a P/E ratio of 14.8, reflecting its strong position in the industry. The company's revenue growth in the last twelve months (LTM2023.Q2) was 18.64%, a notable figure despite some slowing down in recent times as indicated by InvestingPro Tips.

TSMC, which manufactures semiconductors for Apple and Nvidia based on Arm architecture, currently produces 3-nanometer chips and has plans for mass production of 2-nanometer chips in 2025. As inventories at smartphone and computer manufacturers are depleted, restocking demand is expected to surge. This is reflected in the company's high return on assets of 20.34% (LTM2023.Q2), as noted by InvestingPro.

The company invested $25.2 billion in capacity expansion during the first three quarters of this year, suggesting that its total capital spending for 2023 might reach the lower end of its projected $32-36 billion range. As a primary supplier of AI accelerator chips for Nvidia Corp . (NASDAQ:NVDA), TSMC has experienced a surge in demand following the launch of ChatGPT, resulting in its production capacity being expected to be stretched until 2024.

Potential challenges lie ahead. U.S. restrictions on AI chip sales to China could impact TSMC's orders from U.S. companies such as Nvidia. Additionally, a significant drop in Q3 order bookings by ASML Holding NV (AS:ASML), one of TSMC’s largest customers, suggests potential capital expenditure cuts by the chipmaker.

TSMC also produces iPhone chips for Apple Inc (NASDAQ:AAPL)., with demand potentially influenced by economic downturns and China's uneven recovery from Covid. Despite these challenges, Murata Manufacturing Co (OTC:MRAAY). anticipates a resurgence in the smartphone market this year.

On a positive note, according to InvestingPro Tips, TSMC has consistently increased its earnings per share and has maintained dividend payments for 20 consecutive years, offering some reassurance to investors. For more insights like these, consider exploring InvestingPro's premium offerings, which include 20+ additional tips.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.