TSMC has not yet felt a decline in the chip market, with quarterly profits rising 80%, but future spending will still be cut off

TSMC has not yet felt a decline in the chip market, with quarterly profits rising 80%, but future sp

Against the background of not the most optimistic forecasts and reports from the rest of the semiconductor market, many investors expected, if not the worst, quarterly reporting from TSMC, but in the third quarter the company managed to justify its own revenue projections, which rose by 36% to $20.23 billion annually. Net profits increased by 80% to $8.8 billion, while capital spending for the current year had to be reduced from $40 billion to $36 billion.

In fact, by the end of the third quarter, TSMC had been able to spend $25.5 billion on the expansion of production and implementation of new lithographic standards since the beginning of the year. If it had intended to implement the original capital expenditure plan, it would have had to spend about $14 billion in the fourth quarter. It is clear that, given the decline in demand for semiconductor components, it would not make any sense to do so, so that the amount would be reduced by $4 billion, and the total capital expenditure for the current year would not exceed $36 billion.

The Director-General of TSMC, C.C. Wei, stated at the quarterly report event that it was too early to judge the extent of the market correction of the semiconductor components, but he was confident that the maximum effect of the increased stock on the company's business would be reached in the first half of next year.

In the fourth quarter, the company's management predicts that the TSMC's revenues will be in the range of $19.9 billion to $20.7 billion. If in the third quarter the profit rate was maintained at 60.4 per cent against the forecast of 57.5 per cent or 59.5 per cent, in the fourth quarter the company is expected to be in the range of $59.5 to 61.5 per cent. The TSMC's operating rate of return in the last quarter was also higher than forecast, reaching 50.6 per cent against the expected 47-49%, and in the current quarter it could fall into a higher range of 49.5 per cent.

The consistent increase in TSMC revenues in the third quarter was 14.8 per cent, for which the company recommended thanking the high demand for 5 million products. The latter increased its share of total revenues from 21 per cent to 28 per cent during the quarter. The demand for 7 million products declined steadily, as the share of this product fell from 30 per cent to 26 per cent. It was 34 per cent a year ago, and now the company's revenue engine is taking over 5 million processors and derivatives. In total, the mitographic standards of 8 nm formed 54 per cent of TSMC revenues in the third quarter. This was quite high against the background of previous periods, and it was largely responsible for the good performance of revenues in the less favourable macroeconomic conditions.

By the third quarter, the use of smartphones slightly increased its impact on the revenues of TSMC, increasing its own share from 38% to 41% compared to the second quarter of this year. In the high-performance computing segment, the reverse trend was observed, as the share of this type of components fell from 43% to 39%. In monetary terms, only 4% increased in monetary terms, while in relative terms, the share of the private revenue remained at 10%. In the second, the share of smartphones showed a consistent 25% increase. The high-product computing segment, which includes both central and graphic processors, added only 4%, and this illustrates the decline in demand for the industry ' s products. The auto segment increased by 15%, while the consumer electronics market again showed a 2% decline in revenue.

In geographical terms, North America increased its share of revenues from 64 per cent to 72 per cent, while China reduced it from 13 per cent to 8 per cent. Asia and the Pacific reduced its share of revenues from 12 per cent to 10 per cent, and Japan has already held stable 5 per cent for several consecutive quarters. In Europe, the Middle East and Africa, TSMC received 5 per cent of all revenues in the third quarter, one percentage point less than in the second quarter.