TSMC Defies Industry Downturn with 78% Rise in Q4 Profit

TSMC Defies Industry Downturn with 78% Rise in Q4 Profit

Taiwan Semiconductor Manufacturing Co. (TSMC) – the world’s largest contract chipmaker – posted a 78% rise in fourth-quarter net profit on Thursday, yet another quarterly record, as strong sales of advanced chips helped it defy a broader industry downturn that battered cheaper commodity chips. The company’s net profit for October-December hit a record T$295.9 billion ($9.72 billion) from T$166.2 billion a year earlier.

The chip sector has been grappling with weak demand for gadgets such as smartphones as inflation accelerates and interest rates rise, against a backdrop of geopolitical tension. However, TSMC’s business has been boosted by a global chip shortage that was sparked by pandemic-fuelled sales of smartphones and laptops. Even though the chip shortage has eased, analysts said the company’s dominance in making some of the world’s most advanced chips has kept the firm’s order book full.

Revenue for the quarter climbed 26.7% to $19.93 billion, versus TSMC’s prior estimated range of $19.9 billion to $20.7 billion. The company is also a major supplier to Apple Inc and its share price fell 27.1% in 2022, but is up 8.5% so far this year giving the firm a market value of $412.78 billion. The stock rose 0.4% on Thursday versus a 0.1% fall for the benchmark index (.TWII).

In October, TSMC cut its annual investment budget by at least 10% for 2022 and struck a more cautious note than usual on upcoming demand, flagging challenges from rising inflationary costs and predicting a chip downturn for 2023. However, TSMC’s strong performance in advanced chip sales helped the company to post record profits in Q4 of 2022.

The pandemic has accelerated the shift towards digitalization and remote work, which has led to an increase in demand for devices such as smartphones, laptops and other electronic devices. This increased demand for electronic devices has led to a chip shortage, which has benefited companies like TSMC that specialize in the production of advanced chips. As the world continues to recover from the pandemic and demand for electronic devices remains strong, it is likely that TSMC will continue to see strong sales in advanced chips, helping the company to defy the broader industry downturn.

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