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Taiwan Semiconductor Manufacturing Co. Ltd. Reports 19.3% Fall in Net Profit

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Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) recently announced a 19.3% decline in net profit for the fourth quarter. However, the chip maker still managed to surpass expectations, sparking optimism that the global chip slowdown is easing.

Beating Expectations

TSMC reported a net income of new Taiwan dollars $238.71 billion ($7.6 billion) for the fourth quarter, down from NT$295.90 billion in the same period last year. Analysts polled by S&P Global Market Intelligence projected a net income of NT$224.67 billion for the quarter ended December 31.

Steady Revenue

The company’s revenue, which largely remained unchanged from the previous year, amounted to NT$625.53 billion. In U.S. dollars, fourth quarter revenue reached $19.62 billion, reflecting a 1.5% year-over-year decrease but a 13.6% increase from the previous quarter.

Encouraging Signs for the Chip Market

TSMC’s sales figures have instilled hope that the worldwide chip market is gradually recovering from its slump.

Wendell Huang, Vice President and CFO of TSMC, attributed the success in the fourth quarter to the strong progression of their industry-leading 3-nanometer technology. Although TSMC anticipates certain challenges due to smartphone seasonality in the first quarter of 2024, they also anticipate sustained demand from high-performance computing (HPC) applications.

Financial Performance

Key financial metrics for the fourth quarter are as follows:

  • Gross margin: 53%
  • Operating margin: 41.6%
  • Net profit margin: 38.2%

Outlook for First Quarter 2024

TSMC provided guidance for the first quarter of 2024, including:

  • Revenue: $18 billion to $18.8 billion
  • Gross profit margin: 52% to 54%
  • Operating profit margin: 40% to 42%

Market Response

Following the announcement, shares of TSMC experienced a 1.2% increase in local trading.

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