TSMC reported NT$480.84 billion in revenue, a 10% decrease year-on-year, and net income of NT$181.8 billion, a 23.3% fall from the previous year. Despite the declines, the second quarter figures were higher than expected. The major supplier of the most innovative processors is, however, facing a decrease in demand for consumer electronics following the pandemic.
Taiwan Semiconductor Manufacturing Company, the largest chipmaker in the world, reported a sharp fall in second-quarter profits on Thursday due to a decline in demand for consumer electronics. The results were compared to Refinitiv consensus estimates, showing a revenue of NT$480.84 billion ($15.68 billion) and a net income of NT$181.8 billion, both lower than the expected NT$478.83 billion and NT$172.55 billion respectively. The company had previously projected second-quarter revenue to be between $15.2 billion and $16 billion.
TSMC attributed the decrease in business to macroeconomic difficulties and inventory adjustments by customers. This is the first time the quarterly net income has gone down since 2019 Q2. The third-quarter estimate of revenue is between $16.7 and $17.5 billion. Chief Financial Officer Wendell Huang commented that the third quarter will be supported by the strong growth of 3-nanometer technologies, though the inventory adjustment will continue to be a factor.
The 3-nanometer process technology is rumored to be the basis of Apple's next processor for the iPhone, whose launch is expected by September. The size of each transistor on a chip is represented by the nanometer number; the more transistors, the more powerful the chip. Despite this, the warnings of inventory adjustments from TSMC are likely to affect the firm's revenue.
TSMC is the foremost manufacturer of the world's most sophisticated processors, such as those used in the most recent iPhones, iPads and Macs. However, demand for consumer electronics has decreased since the pandemic hit. Companies stocking up on chips to take advantage of the heightened global demand for laptops and smartphones during Covid induced lockdowns are now dealing with excessive stocks, as shoppers become more reluctant to buy these products due to rising inflation, resulting in chip prices dropping.Apple, one of TSMC's major customers, posted a decline in overall sales for the second quarter running in May.Canalys has reported that the global smartphone market fell by an alarming 11% during the second quarter when compared with the same as last year.Nevertheless, Chiew, an analyst at Canalys, claims that there are signs of a rebound in the smartphone market. "The smartphone market is showing early indicators of recovering after six consecutive quarters of decline since 2022," she said. "Inventory of smartphones is beginning to reduce as smartphone vendors prioritize disposing of old models to make way for new releases."
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