TSMC Net Profit Beats Expectations Despite Semiconductor Slump...Up 2% in Q1

TSMC, the world's largest semiconductor foundry, announced first-quarter net profit that exceeded expectations this year. However, due to the global economic slowdown and the resulting semiconductor market downturn, the net profit growth rate recorded its lowest level in four years.

[Image source=Reuters Yonhap News]

In its first-quarter (January to March) earnings report, TSMC announced on the 20th that its revenue reached 508.63 billion New Taiwan dollars, and net profit was 206.99 billion New Taiwan dollars. This represents an increase of 3.6% and 2.1%, respectively, compared to the same period last year.

However, compared to the previous quarter, both revenue and net profit decreased. Revenue fell by 19% from the previous quarter, and net profit shrank by a significant 30%.

This is analyzed as a result of the global economic deterioration leading to a slowdown in semiconductor demand for smartphones, cloud services, and other sectors. Specifically, smartphone semiconductor sales decreased by 27% compared to the previous quarter. High-performance computing semiconductor sales also dropped by 14%. Although foundry companies are generally less affected by economic recessions than memory semiconductor manufacturers, the decline in customer orders has had an impact.

On the other hand, automotive semiconductor sales increased by 5%.

Earlier, in a conference call following the announcement of the fourth-quarter results last January, TSMC stated that its capital expenditure for this year would be reduced to between 32 billion and 36 billion US dollars, down from 36.3 billion US dollars last year.

TSMC expects semiconductor demand to remain sluggish through the first half of this year but to recover starting in the second half. Wei Zhejia, TSMC's Chief Executive Officer (CEO), said, "The semiconductor cycle will hit its bottom in the first half and enter a recovery phase in the second half," adding, "Second-half revenue will increase compared to last year."

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