Taiwan’s TSMC forecast revenue growth that could be the highest in 10 quarters, saying it was “highly confident” about its long-term prospects and the high-tech applications used in data centers and electric vehicles. There was a demand for chips.
The outlook for the world’s largest contract chipmaker follows blown-out results for the April-June period, which underscore resilient demand amid chip shortages caused by pandemic-fueled sales of smartphones and laptops.
Taiwan Semiconductor Manufacturing Company Limited (TSMC) is a leading Apple Inc supplier and the results are also a testament to iPhone 13 demand despite record global inflation and concerns of an impending recession.
They are likely to ease some concerns after several chip makers, including Micron Technology Inc. (MU.O), recently sounded the alarm that chip shortages made it a glut in some sectors, due to rising inflation and China’s COVID-19 pandemic. -19 restrictions have reduced demand for electronics.
The results helped European chip stocks, including STMicroelectronics, and Infineon, decline in the pan-European STOXX 600 index.
TSMC, whose clients include chip majors such as Qualcomm Inc., also indicated that demand is waning from consumer electronics customers, who will deplete the chip stockpile over the next few quarters in 2023.
“After two years of pandemic-driven demand, this type of adjustment is justified in our view,” TSMC chief executive Sisi Wei said in an online earnings briefing.
But he said long-term demand for TSMC’s chips was “strongly” and that no upcoming down cycle will be as big as 2008.
“Despite ongoing inventory adjustments and macro uncertainties, the structural growth trajectory in long-term semiconductor demand remains firm. We expect our capacity to remain strong and our business to be more resilient.”
Other chip makers such as Samsung Electronics have also highlighted the demand from data-center customers.
TSMC said its capital spending this year would drop the low end of its previous guidance of $40 billion to $44 billion, with some spending pushed to next year as deliveries of some chip-making equipment have been delayed.
It also said inflation posed a challenge, echoing comments from Intel Corp (INTC.O), which has said it plans to raise chip prices due to rising costs.
In May, Japan’s Nikkei Business Daily reported that TSMC had warned customers for the second time in less than a year that it planned to raise prices.
TSMC has not confirmed the report, saying its pricing was strategic, not opportunistic.
Shares of TSMC are down about 23% so far this year, compared to a 35% drop in the Philadelphia Semiconductor Index — valuing the firm at $408.3 billion.
TSMC said it expects third-quarter revenue to rise to between $19.8 billion and $20.6 billion, up from $14.88 billion a year ago. It raised its 2022 revenue growth forecast to a mid-30s percentile in the range of 29% from the earlier 26%.
In the second quarter ended June 30, TSMC’s revenue rose 36.6%, and net profit jumped 76.4% — the biggest jump in eight quarters — beating market estimates.
TSMC’s net profit for April-June stood at a record T$237.0 billion ($7.94 billion), higher than the T$219.13 billion average of 19 analyst estimates compiled by Refinitiv.
The highest revenue growth for TSMC after demand for Apple iPhone 13 in the last 10 quarters appeared for the first time on BGR India.