TSMC’s Q4 profit to slide 23%, focus on rebounding demand this year

TAIWAN Semiconductor Manufacturing Company (TSMC) is expected to report a 23 per cent drop in fourth-quarter profit on Thursday (Jan 18), but analysts predict better growth this year on the back of rebounding demand.

The likely decline in profit also reflects a strong performance in 2022, when the company, whose customers include Apple and Nvidia, was still riding high on pent-up post-pandemic demand.

The world’s largest contract chipmaker is set to report a net profit of NT$226.4 billion (S$9.6 billion) for the October to December period – its third straight quarter of profit decline, according to an LSEG SmartEstimate drawn from 20 analysts. SmartEstimates give greater weighting to forecasts from analysts who are more consistently accurate.

That compares to the year-earlier net profit of NT$295.9 billion.

Revenue in the final three months of last year came in at NT$625.5 billion, according to Reuters calculations from TSMC data released last week, compared with US$19.93 billion in the year-earlier period, but that still beat both the company’s and market’s expectations.

Global demand for semiconductors began to weaken in the second half of 2022, but analysts say inventories at smartphone and computer makers are running down and restocking demand is expected to pick up.

Given that, much of Thursday’s focus will be on TSMC’s outlook for this year.

Fubon Securities analysts said that having previously expressed concern for TSMC’s first-quarter outlook, they now believed Apple wafer demand remains “steady in the short term”.

“Although there will be seasonal slowdown in Q1 2024, which is widely known by the market, we have not seen additional order cuts.”

SEE ALSO

TSMC halts sales declines after AI demand offsets chip malaise

TSMC gets pulled into Taiwan election fray at debate

KGI Securities analysts said they expected Q1 sales to outperform typical slow season seasonality and that for the full year, it saw mid-20 per cent top-line growth in US dollar terms due to demand recovery and silicon content driven by 5G and high-performance computing applications.

The artificial intelligence boom has helped drive up the price of shares in Asia’s most valuable company, with TSMC’s Taipei-listed stock having surged 32 per cent in 2023, compared with a 27 per cent gain for the broader market.

TSMC is due to report at 0600 GMT on Thursday. REUTERS