Cailianshe July 14th (Editor Zhou Ziyi) TSMC (TSMC) announced its second-quarter performance better than expected on the 14th, with net profit increasing by 76% year-on-year. However, TSMC expects that 2023 will usher in a cycle of declining demand.
In the second fiscal quarter ended June, TSMC's net profit was NT$237 billion (US$7.9 billion), and increased 76% year-on-year, and was previously estimated to be NT$219.81 billion. Gross profit margin was 59.1% in the second quarter, compared with 55.6% in the previous quarter, and an estimated 56.8%. Operating profit in the second quarter was NT$262.12 billion, an increase of 80% year-on-year.
Last week, Samsung Electronics reported the second quarter financial report, with sales reaching 77 trillion won, a year-on-year increase of 21%, slightly higher than expected, which once triggered an increase in Asian stock markets.
The road ahead is still "hard to go"
Since this year, the situation in the entire chip industry has not been satisfactory, with rising costs and declining demand, and investors are selling. Although TSMC, as the leader in the chip foundry industry, its customers , Apple , Nvidia, , Qualcomm , etc. are all leading companies in the industry, its stock price has fallen by more than 20%.
Although the TSMC performance report may ease investors' concerns a little, TSMC's future path is still extremely challenging.
TSMC expects that will experience a decline in chip demand in in 2023. Fortunately, the overall decline is better than the 2008 cycle.
Globally is facing the challenge of rising costs due to inflation, especially in the semiconductor industry. TSMC expects capital expenditure in 2022 to be closer to the lower limit of the forecast range, which was previously forecast to be $40-44 billion in 2022. TSMC will push some of its capital expenditures this year to 2023.
From the perspective of the revenue of each branch in the second quarter, the revenue of the high-performance computing (HPC), which accounts for 43% of the total revenue, grew by 13%, while the revenue of smartphone chipsets, which accounts for 38% of the total revenue, increased by only 3%, which shows that global demand for smartphones is weak. TSMC said it expects the increase in stocks of high-end smartphones to "not be too much". Kristine Lau, an analyst at Third Bridge, an investment research firm, said, "With weak terminal demand expectations, the global semiconductor industry's inventory presence is increasing. Order cuts and demand forecasts are becoming more common."
Future outlook
Despite facing a sluggish demand period, TSMC still stated on the earnings call that customer demand continues to exceed its supply capacity, and sales (in US dollars) in full-year 2022 will grow by more than 30%.
For third-quarter revenue, TSMC management also gave a good outlook, with sales expected to reach US$19.8 billion to US$20.6 billion in the third quarter, operating margin reached 47% to 49%, and market estimates were 46.1%.
TSMC said that production capacity will remain tight this year, but capacity utilization is expected to remain good next year. Overall, 2023 is still a year of growth for TSMC.
In terms of the production of the new generation of chips, TSMC said that the 3-nanometer chip process will still be carried out on time and will be put into production in the second half of the year; and the more advanced 2-nanometer process is currently being developed according to the progress and is expected to be mass-produced in 2025.
Credit Suisse analyst Randy Abrams and others said that TSMC is still one of their first choices because the company's market share is increasing and it remains firmly dominant.
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