TSMC's November Revenue Dips 15.3% MoM

On December 8th, Taiwan Semiconductor Manufacturing Company (TSMC), a prominent semiconductor foundry, disclosed its revenue performance for November. Following a record-breaking month in October, TSMC reported a 15.3% month-on-month decrease in revenue for November, amounting to approximately NT$2,060.26 billion, and a 7.5% year-on-year decline. The cumulative revenue for the first eleven months of 2023 stood at around NT$19,854.36 billion, marking a 4.1% year-on-year decrease.

TSMC's financial outlook for Q4 2023, outlined during the recent earnings call, projected revenue between USD 18.8 billion and USD 19.6 billion, with gross and operating margins ranging from 51.5% to 53.5% and 39.5% to 41.5%, respectively. With an exchange rate of 1 USD to 32 NTD, this corresponds to NT$601.6 billion to NT$607.2 billion in Q4 revenue, indicating a growth of 9% to 13% compared to Q3. Based on the disclosed figures for October and November, TSMC expects to meet its financial targets if December's revenue reaches approximately NT$1,524 billion.

Despite the current short-term inventory cycle, TSMC reiterated its commitment to supporting customer growth, emphasizing prudent capital expenditure and capacity planning aligned with long-term market demand. The company continues close collaboration with customers for strategic, long-term capacity planning, investing in cutting-edge process technologies to facilitate customer growth and ensure shareholder profitability.

As per TrendForce's report, TSMC's positive performance can be attributed to replenishment demand for PC and smartphone components, urgent orders for 5G/4G mid to low-end smartphones, and revenue from the high-priced 3nm process. This contributed to a 10.2% sequential growth in Q3 revenue to USD 17.25 billion, with 3nm's contribution reaching 6% and TSMC's overall revenue share from advanced processes (7nm and below) nearing 60%.

Morgan Stanley's investment report acknowledged TSMC's long-term gross margin target of 53% but highlighted potential challenges, including increased depreciation in 2024 and the static pricing of Apple's 3nm wafers at $20,000. The report anticipated a 7% quarter-on-quarter decline in revenue for Q1 2024, with Intel's 3nm orders not expected to experience rapid short-term growth.