TSMC Ascends to 'Semiconductor Throne'... Intel Cuts Thousands of Jobs

TSMC Expected to Become World's No.1 Semiconductor Company 35 Years After Founding
Intel Struggles Amid PC Demand Decline... Considering Layoffs
Q4 Earnings Show Clearer Divide

[Asia Economy Reporter Han Ye-ju] Taiwan's TSMC, the world's No. 1 foundry (semiconductor contract manufacturing) company, is expected to record an 'earnings surprise' in the third quarter of this year and surpass Samsung Electronics to become the 'global semiconductor leader' in terms of sales. On the other hand, Intel, a leading U.S. semiconductor company, is reportedly considering large-scale layoffs as it struggles with slowing sales. As the 'semiconductor winter' is expected to intensify until next year, the performance gap among major companies is also expected to become more pronounced in the fourth quarter.

According to the industry on the 14th, TSMC announced in its earnings report the previous day that its third-quarter sales and net profit for this year were NT$613.14 billion (approximately KRW 27.487 trillion) and NT$280.87 billion (approximately KRW 12.594 trillion), respectively. These figures represent increases of 47.9% and 79.7% compared to the same period last year. The results exceeded both market expectations and TSMC's own estimates. TSMC's gross profit margin and operating profit margin were recorded at 60.4% and 50.6%, respectively.

TSMC's achievement is attributed to increased wafer sales in advanced processes amid a frozen global IT market due to rising prices. TSMC is expected to break the duopoly of Samsung Electronics and Intel in the global semiconductor market and rise to the top in its 35th year since establishment.

While TSMC's operating profit rose sharply, Samsung Electronics, the previous No. 1, is expected to see a significant decline in its third-quarter performance. Samsung Electronics released its preliminary third-quarter earnings on the 7th, showing results that fell short of expectations. Samsung Electronics' semiconductor (DS) division sales are estimated at KRW 24.6757 trillion. Securities firms estimate that Samsung Electronics' semiconductor division operating profit for the third quarter will be in the KRW 6 trillion range, about a 40% drop compared to the third quarter of last year (KRW 10.06 trillion).

Intel, the world's largest comprehensive semiconductor company, is also expected to report third-quarter sales of about $15.49 billion (approximately KRW 22.07 trillion). Its profits are forecasted to decline by 20% compared to the same period last year. Intel's stock price has fallen more than 50% this year and dropped over 20% in the past month alone. With PC demand plummeting, Intel's core business, central processing unit (CPU) sales, is expected to take a significant hit. As the need for cost reduction grows, Intel is also expected to announce plans for workforce reductions. As of the end of July, Intel had 113,700 employees, and it is anticipated that the sales and marketing departments within Intel will see a 20% reduction in staff.

Experts cite changes in the semiconductor industry's landscape as the reason TSMC has risen to become the world's largest semiconductor company. The foundry business, which was relatively undervalued in the global market, has gained momentum, allowing TSMC, the overwhelming No. 1 foundry company, to rise. While comprehensive semiconductor companies like Samsung Electronics and Intel have faltered in the memory semiconductor sector, TSMC has benefited from improvements in foundry performance. The memory semiconductor market is known for its rapid fluctuations depending on economic conditions.

Recently, with the increase in demand for 5th generation mobile communications (5G) and automotive semiconductors, the foundry market is growing faster. Market research firm Omdia forecasts that the global foundry market will grow from $98.6 billion this year to $145.6 billion (approximately KRW 207.48 trillion) by 2025, with an average annual growth rate of 13.4%.

The fortunes of semiconductor companies are also expected to diverge in the fourth quarter. According to global market research firm IC Insights, TSMC's second-half sales are estimated to increase by 8% compared to the first half, reaching $22.35 billion (approximately KRW 26.59 trillion). Annual sales are expected to increase by 24% compared to the previous year.

On the other hand, Intel's second-half sales are expected to contract by 10% compared to the first half. Annually, it is estimated to record a 4% growth rate compared to last year, with semiconductor inventory accumulation in the first half likely leading to sluggish performance in the second half.

This content was produced with the assistance of AI translation services.