By
Bhushan Akolkar
October 19th, 2023
Following an impressive Q3 2022 financial report, TSMC announces that it is taking a more cautious productive approach against next year.
Taiwan Semiconductor Manufacturing Company Limited (TSMC) saw its Q3 2022 profit climb 80% according to its latest fiscal report. The chip-manufacturing giant’s impressive outing comes from strong sales of its advanced chips used in data centers and electric cars. This is TSMC’s strongest quarterly profit in two years, despite macroeconomic constraints from global chip shortages. Furthermore, the latest TSMC Q3 2022 report surpassed the expectations set by analysts for the same period.
TSMC Q3 2022 Results
For the period that ended September 30th, TSMC reported a tidy net profit of T$280.9 billion, or $8.81 billion. This sum is up from the T$156.3 billion the leading Taiwan-based semiconductor company realized a year ago. According to Refinitiv, TSMC’s net profit was at T$265.64 billion. In addition, TSMC revenue for the 2022 third quarter increased 36% to $20.23 billion. This haul compares favorably to the company’s previous expectation of no more than $20.6 billion for the same July-September period.
However, TSMC shares did not share the good fortune of the globally-renowned company’s net profit or revenue haul. The company’s stock dipped 0.6% on Thursday, compared with a 2.1% slide for the benchmark index. Furthermore, shares in TSMC have now sunk approximately 36% so far this year, giving the company a market value of $323.7 billion.
TSMC to Minimize Use of Productive Resources Ahead of 2023 Due to Rising Inflation, Chip Downturn
Meanwhile, other developing stories from TSMC reveal that the leading semiconductor firm has cut its 2022 annual investment budget by at least 10%. In addition, TSMC is also taking a more cautious approach to upcoming demand, as well as other macroeconomic indices. These include headwinds from soaring inflationary costs and the possibility of a chip downturn in 2023.
Prior to this, it was reported that TSMC had benefited from the pandemic-triggered global chip shortage, which drove up sales of smartphones and laptops. Although this shortage is no longer as intense, analysts explain that the firm’s dominance as an advanced chipmaker kept orders coming in.
TSMC CEO Weighs in on New US Export Controls
TSMC CEO C.C. Wei recently spoke about how the company is weathering challenges posed by the latest US export controls. According to Wei, TSMC had secured a one-year authorization that covered its factory in Nanjing, China. In addition, the TSMC chief executive also stated:
“Based on our initial reading and feedback from customers, the new regulations sets the control threshold at a very high-end specification, primarily used for AI or supercomputing applications. Therefore our initial assessment is that the impact to TSMC is limited and manageable.”
On TSMC’s more cautionary approach to planning investments for next year, Wei also explained:
“We expect probably in 2023 the semiconductor industry will likely decline, but TSMC also is not immune.”
The new US export rules reportedly aim to slow China’s progress in advanced chipmaking. According to its rules, companies seeking to supply Chinese chip makers with sophisticated gear must obtain a license from the US Department of Commerce. However, there are expectations that the American government will spare some foreign companies operating in the East Asian country.