Taiwan Semiconductor Manufacturing Co. Reports Decline in Net Profit

by Warren Seah

Taiwan Semiconductor Manufacturing Co. (TSMC) experienced a drop in net profit during the third quarter, primarily due to lower revenue from chips used in smartphones and high-speed computing. However, the company anticipates stronger revenue in the current quarter.

Net Profit Performance

In comparison to the previous year, TSMC’s net profit declined by 25% to NT$211.0 billion (US$6.51 billion). This surpassed the estimate of NT$189.70 billion from analysts polled by S&P Global Market Intelligence. On a positive note, net profit increased by 16% from the second quarter.

Revenue Statistics

Third-quarter revenue experienced an 11% decline from the previous year, amounting to NT$546.73 billion. However, it showed a 14% increase from the previous quarter.

Sales Slump and Inventory Clearance

TSMC has recently faced a sales slump as clients work to clear their inventory. This follows a period of robust growth driven by increased smartphone and data center demand due to the pandemic.

Operating Profit Margin

The company’s operating profit margin decreased from 50.6% last year to 41.7% this year, representing a decline of 8.9 percentage points. It was also slightly lower than the previous quarter by 0.3 percentage points.

Outlook for the Fourth Quarter

TSMC projects that its revenue for the fourth quarter will rise to a range between US$18.8 billion and US$19.6 billion, compared to US$17.28 billion in the third quarter. However, it forecasts a further drop in operating profit margin to a level between 39.5% and 41.5%.

Revenue Breakdown

During the third quarter, revenue from smartphones increased by 33% compared to the previous quarter, while high-performance computing revenue saw a 6% increase. On the other hand, revenue from the automotive sector dropped by 24% from the previous quarter.

Regional Revenue Distribution

TSMC reported that revenue from customers in North America accounted for 69% of the total revenue, up from 66% in the second quarter. Revenue from China remained steady at 12% compared to the previous quarter.

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