TSMC turned record profit last quarter, but cuts investments in 2023

TSMC turned a record profit of 9 billion euros in the last quarter of 2022. The company will announce this on Thursday during the presentation of its quarterly figures. However, the company will make fewer investments in 2023 due to the falling demand for chips.

TSMC recorded last quarter a profit increase of 78 percent compared to a year earlier, for a total of 9 billion euros. That’s a record for the company, writes news agency Reuters. Turnover increased by 42.8 percent to EUR 19.1 billion. In the past quarter, the company mainly achieved more turnover from advanced hpc chips, which are used for data centers and supercomputers.

At the same time, TSMC is lowering its expectations for the beginning of 2023. The company expects 15.5 to 16.3 billion euros in turnover in the coming quarter, lower than initially expected. The company will also reduce capital expenditures in the coming year. In the past year, the company spent more than 36 billion dollars on R&D and the construction of new chip factories, for example. The company wants to spend 32 to a maximum of 36 billion dollars this year. TSMC CEO CC Wei expects the chip sector to “shrink slightly” in 2023, but that TSMC will “grow slightly,” writes Reuters.

TSMC is lowering its investments due to inventory corrections and declining demand for chips. This has been the case for some time, especially for consumer electronics such as smartphones. The demand for chips in other market segments, such as the aforementioned hpc segment, has remained higher to date. Such markets are less sensitive to economic uncertainty.

This is also reflected in TSMC’s revenue distribution. Smartphone chip sales fell 4 percent in the quarter, but TSMC still derives 38 percent of its revenue from the smartphone segment. Sales from other direct consumer electronics fell by 23 percent and accounted for 2 percent of TMSC’s total sales in the last few months of 2022. HPC sales, on the other hand, increased by 10 percent to 42 percent of total sales. High-performance computing is therefore TSMC’s largest source of income.

In addition, TSMC generated 32 percent of its revenue from 5nm processes in the past quarter, until recently its most advanced nodes. 7nm accounted for 22 percent of sales. The Taiwanese chip giant started mass production on 3nm at the end of December, but results on that node are not included in the quarterly figures.