TSM Stock: Chipmaker TSMC Posts Mixed Q4 Results

Taiwan Semiconductor Manufacturing (TSM), the world’s largest contract chipmaker, on Thursday beat expectations for earnings in the fourth quarter but missed on sales. It also guided below views for the current quarter as chip demand weakens. Still, TSM stock rose in early trading.

Taiwan Semi, better known as TSMC, earned $1.82 per U.S. share on sales of $19.93 billion in the December quarter. Analysts polled by FactSet had predicted TSMC earnings of $1.80 a share on sales of $20.6 billion. On a year-over-year basis, TSMC earnings rose 57% while sales climbed 30%.

For the current quarter, TSMC forecast sales of $16.7 billion to $17.5 billion. The midpoint of $17.1 billion was below Wall Street’s target of $17.65 billion. In the year-ago period, it generated sales of $16.49 billion. Its guidance implies first-quarter sales growth of just 1% year over year.

In premarket trading on the stock market today, TSM stock advanced 3.2% to 84.36.

Taiwan Semiconductor produces chips for fabless semiconductor firms such as AMD (AMD), Apple (AAPL), Nvidia (NVDA), Qualcomm (QCOM) and others.

Chip Demand Weakening

“Our fourth-quarter business was dampened by end-market demand softness, and customers’ inventory adjustment, despite the continued ramp-up for our industry-leading 5-nanometer technologies,” Chief Financial Officer Wendell Huang said in a news release.

He added, “Moving into first-quarter 2023, as overall macroeconomic conditions remain weak, we expect our business to be further impacted by continued end-market demand softness, and customers’ further inventory adjustment.”

Circuit widths on chips are measured in nanometers, which are one-billionth of a meter.

In the fourth quarter, shipments of 5-nanometer chips accounted for 32% of TSMC’s total wafer revenue while 7-nanometer chips accounted for 22%. TSMC defines 7-nanometer and smaller nodes as advanced technologies.

TSMC noted that it has seen demand soften for data center chips. Meanwhile, demand for chips for smartphones and consumer electronics remains weak.