- The world’s largest contract manufacturer of microchips saw fourth quarter revenue increase 42.8% y/y to NT$625.5b (US$19.93 bn), missing analyst estimates of NT$636bn for the first time in two years.
- TSMC posted a 78% increase in net profit year over year to NT$295.9bn (US$9.6bn), exceeding forecasts for NT$287.4bn. Profitability was boosted by a favourable exchange rate and cost-cutting.
- Compared to the third quarter of 2022, revenue was up 2.0% and earnings rose by 5.4%.
- The gross margin for the most recent quarter was 62.2%, with the operating margin coming in at 52.0%, and net profit margin at a very impressive 47.3%.
- TSMC did however warn that first-quarter revenue for 2023 would drop by as much as 5%, and it would also slash capex as a result of softer demand due to a slowing global economy.
- Revenue will be in a range between US$16.7 billion and US$17.5 billion – and the microchip foundry now expects capex to decrease to between US$32 and US$36 billion in 2023 from US$36.3 billion in 2022. Gross margins are anticipated to compress to between 53.5% and 55.5%, with operating margins expected to be between 41.5% and 43.5%.
- Taiwan Semiconductor Manufacturing Company has the world’s most advanced fabrication technology and controls over half the global market for made-to-order microchips to clients like Apple, AMD, ARM, Sony, Nvidia, Qualcomm, and Broadcom. TSMC is facing fierce competition from the likes of Intel and Samsung, both of which are investing heavily in the sector, but which also have a lot of catching up to do. TSMC is our preferred pick amongst the semiconductor companies – and famed investor Warren Buffett also likes the stock, with Berkshire Hathaway having taken a $4.1 billion stake in the company in November last year.
By Lee Kern