Taiwanese Semiconductor Manufacturing Company, or simply TSMC posted its Q4 profit on Thursday morning, which drops by 19% as shrinking high global inflation hits demand for chips used in servers, cell phones and automobiles. Though it dropped by a massive 19% on its profit in the fourth quarter, still the results were better than the markets’ expectations.
PHOTO: BLOOMBERG
TSMC (2330.TW) is the largest semiconductor chip maker in the world with a portfolio of big clients across the globe, including Nvidia (NVDA.O) and Apple (AAPL.O). The company saw a big drop in its net profit in Q4 from a particularly high T$295.9 billion in 2022 to T$238.7 billion ($7.6 billion) in 2023.
The results beat the market’s expectations of T$226.4 billion slightly, coming from the analysts who are consistently accurate in their forecasts. Moreover, its revenue slipped by 1.5% to $19.62 billion in the fourth quarter from the previous year, which is in line with the previous forecast of $18.8 – $19.6 billion revenue.
A better performance than the market’s forecast was achieved partly because of a reduced capital expenditure in the last quarter, the company spent $5.24 billion in capital expenditure in Q4 compared to the $7.1 billion in the previous quarter.
The capital expenditure for the entire year of 2023 came in at $30.45 billion, slight less than a previous forecast of $32 billion.
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Asia’s Most Valuable Company
TSMC being the most valuable listed company in Asia posted its profit earnings for Q4 on Thursday which drops 19%. This situation arises pertaining to a difficult economic condition China and the world as a whole with rising inflation rates and a slow demand.
As the largest maker of semiconductor chips, TSMC will have to navigate through this uncertain situation and an unclear industry outlook due to a US-China chip war making it vulnerable.
Despite a bleak economic condition, TSMC has been boasting on the stock markets as its listed shares in the Taipei’s stock exchange surged more than 32% previous year, which continued in 2024, as the stocks increased by 1.2% on Thursday just before results announcement.
This makes the company the largest and most valuable listed company in Asia by far with a market value of $478.3 billion.
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Demand in the Coming days
The demand for semiconductor chips began to shrink in the second half of 2022, which continued the whole of 2023. However, the analysts are now forecasting a reversing trend as smart phone and computer manufacturers are running out of their stock which will eventually lead to restocking demand.
Analysts at Fubon Securities said that “having previously expressed concerns for TSMC’s first-quarter outlook, they now believe Apple wafer demand is still steady in the short term. Moreover, they noted that, “although there will be seasonal slowdown in Q1 2024, which is widely known by the market, we have not seen additional order cuts.”
KGI Securities analysts expect “Q1 sales will 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.
($1 = 31.5550 Taiwan dollars)