benefited from the expansion of revenue share of advanced process chips such as 5nm. TSMC maintained high growth in the third quarter report, with net profit rising by 79.7% year-on-year, and gross profit margin continued to expand to 60.4% month-on-month. However, affected by industry uncertainty, TSMC lowered its annual capital expenditure by 10%. The company warns that the first half of next year will be the most intense period of semiconductor inventory adjustment, and the overall semiconductor industry may fall into recession.
On the afternoon of October 13, TSMC released its third quarter financial report for 2022. The company's quarterly revenue was NT$613.142 billion html, NT$1 , surpassing the market's estimate of NT$604.52 billion, a year-on-year increase of 47.9% and a month-on-month increase of 14.8%; net profit of NT$280.866 billion hit a new record, NT$279.7% year-on-year increase of , a month-on-month increase of NT$264.66 billion, and a year-on-year increase of NT$264.66 billion; operating profit of NT$310.324 billion, a year-on-year increase of 81.5%. In terms of profit margin, TSMC's gross profit margin in the second quarter was 60.4%, setting a new record high, exceeding the market estimate of 58.9%, and 59.1% in the previous quarter; operating profit rate is 50.6%, exceeding the market estimate of 48.7%, and 49.1% in the previous quarter. After the financial report of
was released, TSMC US stock rose more than 1% before the market opened.
advanced process revenue share climbed to 54%
In terms of process, the shipment of 5nm process wafer in the second quarter accounted for 28% of TSMC's revenue (21% in the previous quarter); the shipment of 7nm process wafers accounted for 26% of the company's revenue (30% in the previous quarter); the total revenue of advanced processes (7nm and more advanced processes) reached 54%, which continued to expand from the previous quarter (51%). The revenue share of 16nm and 28nm is 12% and 10% respectively.
divided by product type, high-performance computing (HPC) revenue growth decreased, revenue increased by 4% month-on-month, accounting for 39% of the quarter (43% in the previous quarter); the revenue share of traditional strong smartphone business increased, revenue increased by 25% month-on-month, and revenue accounted for 41% (38% in the previous quarter); the revenue of the automotive chip business increased by 15% month-on-month, and revenue accounted for 5% (5% in the previous quarter); the Internet of Things business also performed strongly, revenue increased by 33% month-on-month, and revenue accounted for 10% (8% in the previous quarter).
Q4 revenue and gross profit margin are expected to hit a new high
financial report guidance, TSMC expects sales in the fourth quarter to reach US$19.9 billion to US$20.7 billion; gross profit margin is 59.5% to 61.5%, market estimates are 57.9%; operating profit rate is 49% to 51%, market estimates are 47%; TSMC's Q4 revenue and gross profit margin are expected to hit a new high.
However, affected by industry uncertainty, TSMC lowered its capital expenditure by 10% this year. expects capital expenditure for the whole year of $36 billion, previously expected to be between $40 billion and $44 billion.
The semiconductor industry may fall into recession next year
In the subsequent call, TSMC President Wei Zhejia warned that will be the most severe period of semiconductor supply chain inventory adjustment next year, and the overall semiconductor industry may decline next year. But TSMC has key advantages and its operations will continue to grow. Benefiting from strong demand for advanced processes with efficient computing applications, USD revenue CAGR (annual compound growth rate) is expected to reach 15-20% in the next few years.
For capital expenditure reduction, TSMC said that annual capital expenditure is based on expectations for growth in the next few years. was estimated to be US$40-44 billion a few months ago, and now it has further revised down. In addition to the challenge of equipment delivery, another major factor is based on the optimization of capacity for the current medium-term operation outlook, so the capital expenditure this year has been lowered.
But TSMC said that 2023 will still be the year for the company to grow; 3nm chips will be mass-produced later this quarter, and customers' demand for 3nm chips is stronger than supply; demand for advanced processes such as 7nm continues to be strong, and the production capacity of 7nm and 6nm processes is expected to not be as high as before.
semiconductor industry collectively cut costs and "winter"
The entire semiconductor industry is currently cutting capital expenditures to survive the "cold winter". SK Hynix will previously significantly reduce capital expenditure next year by 70% to 80%, becoming the memory manufacturer with the largest correction of capital expenditure.
Previously, Micron also slowed down production and reduced capital expenditure due to the decline in demand. It is expected that capital expenditure will be reduced by about US$8 billion (about RMB 56.72 billion) in fiscal year 2023, will be reduced by at least 30% , and wafer factory equipment expenditure will be reduced by 50%; Kioxia later announced that it will reduce its production capacity of flash storage factories in Yokkaichi City and Kitakyo, Japan from October to 30% .
Due to concerns about the economic recession and the downward cycle of the semiconductor industry, TSMC's stock price has fallen 36% this year.
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