Sales of Advanced Chips Lift TSMC Quarterly Profit 78%

TSMC President and Co-CEO Mark Liu attends an investors' conference in Taipei.

The world’s largest contract chipmaker, TSMC, posted a 78% rise in fourth-quarter net profit on Thursday.

The Taiwanese powerhouse posted a quarterly record, helped by strong sales of advanced chips, despite an industry downturn that hit cheaper commodity chips.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), a major supplier for Apple, saw net profit for October-December hit a record T$295.9 billion ($9.72 billion) from T$166.2 billion a year earlier.

That compared with the T$289.44 billion average of 21 analyst estimates compiled by Refinitiv.

TSMC’s business has been boosted by a global chip shortage sparked by pandemic-fuelled sales of smartphones and laptops.

While the shortage has eased, analysts said dominance in making some of the world’s most advanced chips has kept the firm’s order book full.

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Revenue up 26%

Revenue for the quarter climbed 26.7% to $19.93 billion, versus TSMC’s prior estimated range of $19.9 billion to $20.7 billion.

TSMC’s share price fell 27.1% in 2022, but is up 8.5% so far this year giving the firm a market value of $412.78 billion. The stock rose 0.4% on Thursday versus a 0.1% fall for the benchmark index.

Overall, the chip sector has been grappling with weak demand for gadgets such as smartphones as inflation accelerates and interest rates rise, against a backdrop of geopolitical tension.

In October, TSMC cut its annual investment budget by at least 10% for 2022 and struck a more cautious note than usual on upcoming demand, flagging challenges from rising inflationary costs and predicting a chip downturn for 2023.

The firm said it spent $36.29 billion on capital expenditure in 2022, compared to a previous forecast of around $36 billon.

TSMC, Asia’s most-valuable listed firm, whose clients include chip majors such as Qualcomm, has repeatedly said business would continue to be boosted by a “mega-trend” in the industry, brought by demand for high-performance computing chips for 5G networks and data centres, as well as increased use of chips in gadgets and vehicles.