TSMC Q4 2023 Net Profit Expected to Decline by 23%

TSMC is anticipated to release its financial report for the fourth quarter of 2023 on Thursday, January 18, with analysts projecting a 23% decline in profits. Despite this, analysts foresee a positive trajectory for TSMC in the upcoming year, driven by an expected resurgence in demand.

The profit downturn reflects TSMC's robust performance in 2022, where the company demonstrated resilience post-pandemic, catering to prominent clients such as Apple and NVIDIA. Data compiled from 20 analysts at LSEG SmartEstimate suggests that TSMC is poised to declare a net profit of NT$226.4 billion (approximately $7.21 billion) for the October to December 2023 period, marking the third consecutive quarter of profit reduction compared to the same period in 2022.

TSMC's recently disclosed figures reveal revenue of NT$625.5 billion (approximately $20.1 billion) for October to December 2023, surpassing expectations despite a decrease from $199.3 billion in the corresponding period in 2022.

Analysts acknowledge a global downturn in semiconductor demand from the latter half of 2022. However, they anticipate a rise in replenishment demand as inventories of smartphone and computer manufacturers decrease. The first quarter is expected to surpass typical seasonal trends in sales, and for the entire year, analysts anticipate approximately a 20% growth in dollar-denominated revenue. This growth is attributed to the recovery in demand for 5G and high-performance computing (HPC) applications, coupled with silicon content driven by application needs.