On October 13, TSMC released its third quarter financial report. Data showed that TSMC's total revenue in the third quarter was US$20.2 billion, a year-on-year increase of 35.9% and a month-on-month increase of 11.4%. The gross profit margin reached 60.4%, and the operating profit margin reached 50.6%, both exceeding market expectations. However, at the telephone financial report meeting held on the same day, TSMC President Wei Zhejia said, "It is expected that the semiconductor industry may usher in a decline (cycle) in 2023."
htmlOn 14, during the trading of U.S. stock , TSMC's stock price surged and stabilized, and rose by more than 9% at one point, and finally closed at US$66.62, an increase of 3.92%. However, in the past five trading days, TSMC's stock price was halved, with its market value falling from its high of US$750 billion at the beginning of the year to US$345.5 billion, evaporating nearly 54%.Goldman Sachs released a research report today, reiterating TSMC's "buy" rating, but excluding the "confidence buy" list, the target price dropped from $126 to $89 to reflect the weakening profit outlook and the rising uncertainty of demand.
Smartphone businesses such as Apple have increased revenue
From the data released by TSMC, it can be seen that smartphones (41%) and high-performance computers (39%) occupy the top TSMC's revenue. In terms of smartphones, an insider revealed to the First Financial reporter that Apple is still the biggest contributor to TSMC's smartphone revenue in the third quarter. In 2021, Apple's business has accounted for 25.93% of TSMC's revenue.
In terms of specific financial reports, TSMC's smartphone business revenue accounted for 41% in the third quarter, a month-on-month increase of 25%; high-performance computing business (HPC) accounted for 39%, a quarter-on-quarter increase of 4%; Internet of Things business revenue increased by 33% to 10%. In terms of
, revenue from North American customers accounted for 72% of total revenue, higher than 64% in the second quarter, and revenue from mainland China accounted for 8%, lower than 13% in the last quarter.
Although Apple previously delayed the OEM order for TSMC's 3nm process product N3 due to process problems such as cost and power consumption and switched to N3E, it added stocking of 5nm process. Industry insiders said that this further enhances TSMC's share and profitability in advanced process chips. It can be seen from the third quarter financial report data that advanced technology nodes (7nm and above) account for 54% of TSMC's total revenue. Of these, 5 nanometers contributed the largest revenue (28%), followed by 7 nanometers (26%).
Since Apple's new products have adopted a 5nm process this year, it is expected that the overall proportion of 3nm mass-produced by the end of the year will remain low. In this regard, TSMC pointed out that customer demand exceeds the company's supply capacity, partly due to the ongoing machine delivery problems. It is expected that 3nm will reach a fully utilized state by 2023. At present, the progress of N3E technology development is ahead of schedule and is expected to be mass-produced in the second half of 2023. Compared with N5, N3 is expected to contribute higher revenue in 2023.
inventory adjustment will continue until mid-next year
Although the revenue structure in the third quarter remains unchanged compared with the second quarter, TSMC pointed out that starting from the fourth quarter of 2022, the company's capacity utilization rate of 7nm and 6nm (N7 and N6) will decline, mainly due to the weak smartphone and PC terminal markets and the delay in customer product progress.
TSMC said inventories will peak in the third quarter and start to decline in the fourth quarter. Inventories are expected to rebalance to healthier levels after the first half of 2023 due to weak demand and the off-season in the first half of 2023. In terms of
process, due to the lag of semiconductor supply chain, TSMC expects the decline in 7nm and 6nm utilization rates to continue until the first half of 2023. At the same time, TSMC said that the market demand for 7nm and 6nm tends to be more cyclical than structural phenomena, and it is expected that the demand for 7nm and 6nm will rebound in the second half of 2023. Regarding the expansion of
wafer factory, Wei Zhejia said, "The expansion plan of Nanjing factory is also carried out according to the plan. Although the demand for 7 nanometers has slowed down, the construction of Kaohsiung factory is also carried out according to the progress. The Japanese factory is also carried out according to the progress, meeting customer needs." According to reports, TSMC's factory progress in Arizona, USA is currently "in line with expectations." In terms of terminal demand, TSMC continues to observe weak demand in consumer terminal markets.Based on fourth-quarter revenue expectations, TSMC said it would lower its capital expenditures from the original estimate of $40 billion to $36 billion. In July this year, this budget figure was still US$44 billion.
Previously, AMD and Intel both announced their latest revenue results, both lower than market expectations. Regarding the decline in revenue, AMD CEO Su Zifeng (Lisa Su) responded to "the performance of the PC market is weaker than expected and a major inventory correction for the entire PC supply chain." Last week, AMD significantly lowered its third-quarter revenue expectations. Chai Daixuan, director of
CIC consulting, told the First Financial reporter that the current downstream market is sluggish, limiting the shipment and performance of upstream manufacturers. PC hardware such as CPU, graphics card , etc. are all subject to demand restrictions from downstream. The slow demand for upgrade and replacement has caused upstream manufacturers to have inventory backlogs. In addition, the gradual extension of PC-related component replacement cycle has further tightened the upstream market shipment scale, and supply chain adjustments have reduced processor shipments.
CINNO Research data shows that since July this year, the market sales of mainstream Android brands in the domestic smartphone market, except for Apple, have been showing negative growth. Among them, the year-on-year growth rate of vivo and OPPO shipments declined by more than 30%.
Regarding the prospect of the bottoming out rebound in the PC market, Chai Daixuan believes that this is related to commercial demand. He told reporters that since the outbreak of the epidemic, the field of e-commerce procurement of enterprises has been continuously expanding, and has expanded from the initial procurement of general materials for corporate consumption to the fields of professional and customized products and means of production; from the initial focus on product procurement to the field of enterprise service procurement, thus driving the large customer market to gradually tilt towards e-commerce procurement. "The trend of e-commerce in large customers may bring a new round of demand stimulus to the PC market."
