TSMC Q2 earnings down 27% YoY, Q3 looks better

By Faith Hung and Ben Blanchard

TAIPEI (Reuters) – Taiwanese chipmaker TSMC is expected to report a 27% drop in second-quarter net profit on Thursday as global economic woes weigh on demand for semiconductors, although analysts said performance business should improve in the current quarter.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker and a major supplier to Apple and Nvidia, is expected to post a net profit for the April-June period of 172.53 billion. T$ ($5.58 billion), up from T$237.0 billion a year earlier, according to the average of 21 analysts polled by Reuters.

The expected decline in earnings partly reflects a robust performance from the prior year, when the company was still at the height of post-pandemic pent-up demand.

Analysts at Fubon Investment in Taiwan said they expect the second quarter to be the bottom of the current bear cycle, but while the situation is expected to improve in the third quarter, it will be weaker than normal. given the continued inventory accumulation that is still ongoing.

A senior Taiwan fund manager told Reuters that third-quarter earnings will rebound on expectations for AI demand and new iPhone launches ahead of the year-end shopping season.

“Taiwan hasn’t really benefited from electric vehicles, since the market is in China and most electric vehicle suppliers are in China. But artificial intelligence (AI) is another story,” he said. said, requesting anonymity citing company policy. “Taiwan will benefit the most from AI because the entire AI supply chain is here.”

The second quarter is traditionally a slower sales period for the tech industry, with demand typically picking up in the third quarter and around the year-end shopping season.

TSMC, Asia’s most valuable listed company, reported a surprise rise in net profit for the quarter ended March, up 2% from a year earlier. But it was still the weakest quarterly growth since mid-2019 as global economic woes hurt chip demand.

Last month, the company said growing demand for AI applications was driving many orders and it expected better performance in the second half than the first.

The bright outlook for AI applications has in part driven TSMC’s Taipei-listed stock nearly 30% so far this year, outperforming the broader market, which is up around 22% .

The company will provide guidance for the third quarter and update previous guidance on its earnings call at 06:00 GMT on Thursday.

TSMC’s second-quarter revenue was $480.8 billion ($15.53 billion), according to Reuters calculations, in the middle of an April forecast range of $15.2 billion. to $16 billion, compared to $18.16 billion for the prior year period.

($1 = 30.9600 Taiwan dollars)

(Reporting by Faith Hung and Ben Blanchard; Editing by Shri Navaratnam)

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