TSMC fourth quarter profit beats expectations on robust chip demand

By Ambar Warrick 

Investing.com -- Taiwan Semiconductor Manufacturing Co (TW:2330) (TSMC) logged a better-than-expected fourth-quarter profit on Thursday, aided chiefly by steady demand for chips and a more favorable exchange rate, even as its revenue came in slightly below expectations.

TSMC’s diluted earnings per share for the three months to December 31 was 11.41 Taiwan dollars ($1.82), up from 6.41 Taiwan dollars last year and higher than analyst expectations for a reading of 11.12 Taiwan dollars.

The world’s largest chipmaker also logged an improved net profit margin during the quarter, which rose to 47.3% from 37.9% last year. This helped offset a slightly lower-than-expected revenue figure, which came in at 625.53 billion Taiwan dollars ($19.93B), compared to expectations of 638.99B Taiwan dollars. But the figure was within the company's guidance range. 

The company ramped up shipments of its 5-nanometer chips during the quarter, with the product now accounting for about 32% of its overall revenue. Along with South Korean conglomerate Samsung Electronics Co Ltd (KS:005930), TSMC is the only other firm in the world that manufactures 5 nm chips.

The firm is a major supplier for iPhone maker Apple Inc (NASDAQ:AAPL), as well as other chipmakers including Qualcomm Incorporated (NASDAQ:QCOM) and NVIDIA Corporation (NASDAQ:NVDA). Its shipments to North America made up about 68% of its revenues in 2022. 

TSMC’s overall earnings in 2022 came up to 1.017 trillion Taiwan dollars ($33.39B), nearly twice as the 596.54B Taiwan dollars seen in 2021.  

The company also benefited from a more favorable currency exchange rate in 2022, as the Taiwan dollar tumbled over 20% against the dollar during the year. 

TSMC saw a sharp surge in revenues over the past two years, as increased demand for electronics due to the COVID-19 pandemic and a crypto boom sparked a global chip shortage. While the trend has now reversed, the past two years helped the Taiwanese firm establish its dominance as the maker of some of the most advanced chips in the world. 

This has also helped the firm weather a recent downturn in the industry, which saw peer Samsung recently warn of a severe decline in profits.

TSMC’s Taiwan-listed shares fell 0.3% on Thursday.