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TSMC’s first quarter performance was good, but… The second quarter is a ‘thorny field road’

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Taiwan’s TSMC also suffered a decline in sales growth due to the semiconductor cold wave. Even the No. 1 company in the industry, which has dominated the global foundry (consignment production) market, is experiencing increasing uncertainty about its performance prospects in the first half.

On the 20th, TSMC announced that it achieved sales of 508.63 billion Taiwan dollars (22.1 trillion won) and operating profit of 231.24 billion Taiwan dollars through the first quarter performance announcement of this year.

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Sales increased by 3.6% from NT$491.08 billion in the same quarter of the previous year, but on a monthly basis, sales in March of this year were only NT$145.408 billion (KRW 6.3 trillion), down 15.4% from the previous year. It is the first time in about four years since May 2019 that TSMC’s monthly sales have decreased compared to the same month last year. It is also the smallest sales since October 2021 ($134.539 billion). Dollar-converted sales were $16.72 billion, which is the lowest level of its own forecast (guidance).

TSMC’s sales growth seems to be slowing compared to the previous quarter in the aftermath of order cancellations from customers such as Apple in the first quarter of this year.

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TSMC’s sales decreased by 18.7% compared to the fourth quarter of last year. By customer, sales decreased in high-performance computing (HPC -14%), smartphones (-27%), and Internet of Things (-19%). Sales decreased in all industries except automotive semiconductors (5%).

In particular, advanced semiconductor processes are not avoiding the effects of the economic downturn. TSMC’s 7-nano advanced semiconductor process’ share of sales decreased from 54% in the fourth quarter of last year to 51% in the first quarter of this year. 5nm also decreased from 32% to 31% during the same period.

Net profit was NT$ 206.99 billion (KRW 8.973 trillion), up 2.1% from NT$ 202.73 billion the previous year. Although it exceeded the estimate of NT$192.8 billion compiled by financial information company Refinitiv, the quarterly profit was the lowest in four years. The operating profit margin also decreased slightly from the previous year (45.6%) to only 45.5% in the first quarter.

TSMC predicted that sales in the second quarter (April-June) would also decrease compared to the previous quarter. The company’s second-quarter sales guidance was between $15.2 billion and $16 billion, which is expected to be lower than the second quarter of the previous year ($18.16 billion). The operating margin is also projected to fall short of 49.1% in 2Q, at a range of 39.5% to 41.5% in 2Q.

Wendel Huang, Chief Financial Officer (CFO/Vice President) of TSMC, said, “Our business in the first quarter was affected by weak macroeconomic conditions and weakening end market demand, which is causing customers to adjust their demand.” We anticipate that our business will continue to be impacted by our further inventory adjustments.”

Source: Donga

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