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Taiwan Semiconductor Manufacturing Co. Reports Q3 Results

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Andrew R. Michaud

• October 19, 2023

Taiwan Semiconductor Manufacturing Co. (TSMC), the world's largest contract chip maker, announced its financial results for the third quarter. The company experienced a decline in net profit, primarily due to lower revenue from chips used in smartphones and high-speed computing. Despite this, TSMC's net profit for the quarter reached NT$211.0 billion (US$6.51 billion), surpassing analysts' estimates of NT$189.70 billion according to S&P Global Market Intelligence.

Net Profit and Revenue Performance

Compared to the same period last year, TSMC's net profit decreased by 25%. However, it recorded a 16% increase from the previous quarter. On the revenue front, the company observed a decline of 11% YoY, amounting to NT$546.73 billion for the third quarter. Nevertheless, there was a positive growth of 14% compared to the previous quarter.

Market Challenges and Margin Deterioration

TSMC has been grappling with a sales slump in recent months as clients worked through their inventory. The chip maker experienced a period of robust growth driven by increased demand for smartphones and data centers during the pandemic. However, intensifying market challenges resulted in margin deterioration. TSMC reported an operating profit margin of 41.7%, marking an 8.9 percentage point decline from the same period last year and a marginal decrease of 0.3 percentage point from the previous quarter.

Revenue Breakdown by Segment

In terms of revenue breakdown, TSMC witnessed a notable increase of 33% in smartphone revenue compared to the previous quarter. Additionally, high-performance computing revenue saw a modest growth of 6%. However, automotive revenue experienced a decline of 24% compared to the previous quarter.

Geographical Revenue Distribution

TSMC highlighted that revenue from customers in North America accounted for the largest share at 69%, up from 66% in the second quarter. Revenue from customers in China remained stable at 12% compared to the previous quarter.

These financial results demonstrate the ongoing challenges faced by TSMC in the current market climate. However, the company remains optimistic and continues to navigate these uncertainties.