TSMC could report Q4 revenue above $20.5 billion, another record for quarterly sales and at the high end of its $19.9-$20.7 billion guidance due to a bigger contribution of the 5- and 4-nanometer process for smartphone and HPC applications.
Taiwan Semiconductor Manufacturing, the world's largest contract chipmaker and a major Apple Inc supplier, is scheduled to announce Q4 earnings results before market opens on Thursday, January 12th.
Latest Results
TSMC saw consolidated revenue of NT$613.14 billion, net income of NT$280.87 billion, and diluted earnings per share of NT$10.83 (US$1.79 per ADR unit) for the third quarter ended September 30, 2022.
Year-over-year, third quarter revenue increased 47.9% while net income increased 79.7% and diluted EPS increased 79.8%.
Q4 Guidance
Based on the Company’s current business outlook, management expects the overall performance for fourth quarter 2022 to be as follows:
• Revenue is expected to be between US$19.9 billion and US$20.7 billion;
And, based on the exchange rate assumption of 1 US dollar to 31.5 NT dollars,
• Gross profit margin is expected to be between 59.5% and 61.5%;
• Operating profit margin is expected to be between 49% and 51%.
Sales Growth to Continue
According to Bloomberg, TSMC could report Q4 revenue above $20.5 billion, another record for quarterly sales and at the high end of its $19.9-$20.7 billion guidance due to a bigger contribution of the 5- and 4-nanometer process for smartphone and HPC applications.
A lackluster demand for 7-nm and bigger node chips, such as those for 4G smartphone applications, and weaker-than-expected US dollar appreciation against the Taiwan dollar could imply a gross margin of 60%, the same as the previous quarter.
TSMC's pricing strategy and whether investments for new capacity are boosted again to more than $40 billion will be focuses of the upcoming Q4 results briefing. New prices and the investment plan shed light on when the global chip inventory correction will end and management's view on longer-term semiconductor demand.
Analyst Opinions
Both Goldman Sachs Group, Inc and UBS Group AG expect TSMC's sales to be flat in 2023, with UBS slashing its price target by 7.4%.
"TSMC is not immune to the industry inventory digestion and end-demand correction into 2023," UBS analysts noted. "We lower our 2023 revenue estimate from 3% growth to flat YoY in USD, considering the weaker consumer demand and decelerating high-performance computing growth," Bloomberg wrote.
TSMC's shares plunged 34% from a peak last January as spending on big-ticket items from smartphones to laptops and servers fell after central banks hiked interest rates to counter the mounting inflation.
TSMC's sales rose approximately 43% in 2022 and will likely slow to 6.3% in the current year, Bloomberg analysts projected.
While a healthy recovery is likely in the year's second half, "the pace of demand rebound could be slower than the company expects as there is still lack of clear signs of end demand recovery," Goldman Sachs analysts noted.
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