TSMC's quarterly profit meets forecasts with 0.7% increase

Taipei

TAIWAN Semiconductor Manufacturing Co Ltd (TSMC) posted on Thursday a quarterly net profit that met market expectations, amid fears that sluggish demand for smartphones could hurt the world's largest contract chipmaker's bottom line.

The results of TSMC, whose clients include Apple, are being keenly watched after chip suppliers including Samsung Electronics recently flagged weak demand. Tech giant Apple also slashed its sales forecast due to slowing smartphone sales in China.

TSMC, which is also a key supplier for Qualcomm and Huawei Technologies, posted a net profit of NT$99.98 billion (S$4.4 billion) for the quarter ended December, 0.7 per cent higher than a year ago.

That is roughly in line with the NT$98.94 billion average forecast drawn from 22 analysts, according to Refinitiv data.

Revenue rose 10.7 per cent from the previous quarter and 2 per cent from the same period of the previous year to US$9.4 billion.

That compared with the company's own estimate of US$9.35-9.45 billion and the average US$9.37 billion estimate of 23 analysts polled by Refinitiv.

Analysts said sluggish global smartphone sales, whose chips have powered TSMC for a decade, would partially offset growth from TSMC's leading position in the latest generation of chip-making technology.

"TSMC is another victim of weak iPhone demand and crypto bubble, and the gains through other customers just barely offset that," Mark Li, an analyst at Sanford C. Bernstein, wrote in a note earlier this month.

"Weak iPhone and smartphone is a stiffer headwind and we're turning more cautious on TSMC's outlook this year," he said.

Smartphones would continue to account for 40 to 50 per cent of TSMC's revenue, company chairman Mark Liu told Reuters in an interview last year.

Some, however, remained optimistic on TSMC's dominance in high-performance chips and expected the company to further capture market share in advanced areas such as 7nm manufacturing technology - which packs more transistors on smaller and more power-efficient chips. REUTERS