Chipmaker TSMC Reports Impressive Second Quarter Results Amid Fears Over Reduced Demand Caused By High Inflation And Competition From Rivals

Chipmaker TSMC has reported its earnings for the second quarter of the year and amid reduced demand induced by the high inflation rate and other challenges, the world biggest chipmaker had an impressive quarter.

For the quarter ended June 30^th, TSMC reported revenue of 534.14 billion Taiwanese dollars, the equivalent of US$18.16 billion, and an increase of 43.5 percent from the year-ago quarter. The company’s second-quarter revenue of 534.14 billion Taiwanese dollars surpassed analysts’ expectation of 524.02 Taiwanese dollars, according to Refinitiv.

Net income for the second quarter came in at 237.03 billion Taiwanese dollars, up 76.4 percent from the same period in the previous year. It also surpassed analysts’ expectations. Net income for the quarter is also a record for the company.

TSMC forecasts revenue for the ongoing third quarter to come in between $19.8 billion and $20.6 billion which will surpass the revenue of $14.8 billion that the company reported in the third quarter of last year.

While citing “greater challenges in the supply chains” which he blamed for extending the delivery time for some chipmaking equipment, TTSMC’s CEO CC Wei said that some of the company’s capital expenditure would be “pushed out into 2023.”

TSMC’s impressive results show that the company has been very cautious about its spending in a time where challenges such as rising prices, inflation, supply chain disruptions, increasing cost of materials, the Russia-Ukraine war, etc., are the order of the day. The company’s impressive results, therefore, grease away some of the worries the company, and the general chip market had.

For the quarter, the company said it had some setbacks in the consumer market such as PCs and smartphones, and its data center and automotive business stayed calm. TSMC has some of the most sophisticated manufacturing processes in the world and makes chips for respected companies including Apple.

“We believe the current semiconductor cycle will be more similar to a typical cycle, with a few quarters of inventory adjustment likely through the first half of 2023,” TTSMC’s CEO CC Wei said adding that he sees inventory levels reducing. Inventory levels are currently relatively high suggesting weak demand which could affect semiconductor prices. Investors, on the other hand, are concerned about an excessive supply of chips in the market.

Commenting on TSMC’s impressive results for the quarter while noting that the company’s guidance for the next quarter suggests that the company “continue to grow even in a scenario of the overall chip market being down” on a year-on-year basis, Sze Ho Ng, an analyst at China Renaissance said that “I would say that TSMC is a class of its own, with a well-built moat.”