Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) stock fell 0.60% (As on July 21, 11:40:45 AM UTC-4, Source: Google Finance) after the company forecast a drop of around 10% in 2023 sales and flagged investment spending at the low end of estimates as global economic woes dent demand for chips used in everything from cars to cellphones. The world’s largest contract chipmaker said that high demand for artificial intelligence (AI) and its position as the largest manufacturer of AI chips has not offset broader end market weakness as the global economy recovers more slowly than it had expected. As TSMC steps up its global expansion, the company said production at its first plant in Arizona will be delayed as it faces a shortage of specialist workers. Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker and a major Apple Inc supplier, saw April-June net profit drop to T$181.8 billion ($5.85 billion) from T$237.0 billion a year earlier. That compared with the T$172.55 billion based on average of 21 analyst estimates compiled by Refinitiv.
TSMC, Asia’s most valuable listed company, said second-quarter revenue dropped 13.7% year-on-year to $15.68 billion, in line with the company’s previous forecast. Taiwan Semiconductor Manufacturing Co Ltd estimated investment spending for this year at the lower end of a previous forecast of $32-$36 billion and expects a slower increase in the next few years after dramatic increases in recent years. Gross margin for the quarter was 54.1%, operating margin was 42.0%, and net profit margin was 37.8%. In the second quarter, shipments of 5-nanometer accounted for 30% of total wafer revenue; 7- nanometer accounted for 23%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 53% of total wafer revenue.
The second quarter business was impacted by the overall global economic conditions, which dampened the end market demand, and led to customers’ ongoing inventory adjustment. For the third quarter 2023, the company expects the business to be supported by the strong ramp of the 3-nanomenter technologies, partially offset by customers’ continued inventory adjustment.
Signalling a slightly better few months ahead, TSMC expects third-quarter revenue to pick up to around $16.7 billion-$17.5 billion, from $15.68 billion in the previous quarter. For fiscal 2023, gross profit margin is expected to be between 51.5% and 53.5% and operating profit margin is expected to be between 38% and 40%.
The company revised down its 2023 revenue forecast to a fall of around 10%, from previous guidance of a low-to-mid single digit decline.