TSMC defies chip slowdown with record Q4;  cuts its investments in 2023 as demand weakens

TSMC defies chip slowdown with record Q4; cuts its investments in 2023 as demand weakens

TSMC defies chip slowdown with record Q4;  cuts its investments in 2023 as demand weakens

  • Q4 profit of T$295.9 billion vs. T$289.44 billion, analysts say
  • Fourth-quarter revenue up 26.7% year-on-year to $19.93 billion
  • Sees 2023 investments at $32-36 billion from $36.3 billion the previous year

TAIPEI, Jan 12 (Reuters) – Taiwanese chipmaker TSMC (2330.TW) reported a 78% rise in quarterly profit on Thursday as strong sales of advanced chips helped it defy a broader slowdown of the industry that knocked out the cheaper core chips.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chipmaker, is a rare bright spot in the global tech industry that is struggling with worsening consumer demand driven by inflation rates high for decades, rising interest rates and economic slowdown.

The quarterly profit of rival Samsung Electronics Co Ltd (005930.KS) fell by two-thirds to its lowest level in eight years, as the South Korean company blamed a weaker global economy that drove prices down memory chips and dampened demand for electronic devices.

TSMC’s dominance in making some of the most advanced chips for high-end customers such as Apple Inc (AAPL.O) shielded it from the downturn. Still, it cut its capital spending plan for 2023 on Thursday, pointing to a deteriorating demand outlook.

The chipmaker now expects to spend between $32 billion and $36 billion, down from $36.3 billion in 2022, and projects first-quarter revenue in the range of $16.7 billion to $17.5 billion, up from $17. .57 billion a year earlier.

“We are confident that the business will rebound in the second half,” boosted by product launches, especially for technologies such as artificial intelligence, CEO CC Wei said Thursday.

“We expect the whole industry to decline slightly but TSMC to grow slightly” in 2023, he said.

TSMC, Asia’s most valuable listed company and backed by billionaire Warren Buffett’s investment conglomerate Berkshire Hathaway Inc (BRKa.N), has repeatedly said companies will continue to benefit from a “mega-trend from the demand for high-performance computer chips for 5G networks and data centers, as well as the increased use of chips in gadgets and vehicles.

He reiterated on Thursday that the slowdown in demand was a cyclical problem and that 2023 overall would be a mild year of growth for the company.

For October-December, TSMC posted a record net profit of T$295.9 billion ($9.72 billion) from T$166.2 billion a year earlier. This compares to the T$289.44 billion average of 21 analyst estimates compiled by Refinitiv.

Revenue rose 26.7% to $19.93 billion, compared to TSMC’s earlier estimated range of $19.9 billion to $20.7 billion.

The fourth quarter “was held back by weak end-market demand and customer inventory adjustments,” vice president and chief financial officer Wendell Huang said in a press briefing. Such conditions will continue into the first quarter, Huang said.

TSMC’s share price fell 27.1% in 2022, but has risen 8.5% so far this year, giving the company a market value of $412.78 billion. . The stock rose 0.4% on Thursday against a 0.1% decline for the benchmark (.TWII).

($1 = 30.4420 Taiwan dollars)

Reporting by Yimou Lee and Sarah Wu; Written by Ben Blanchard; Editing by Christopher Cushing

Our standards: The Thomson Reuters Trust Principles.

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