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TSMC cuts capital on tool delays, demand challenges; cautious in outlook

TSMC cuts capital on tool delays, demand challenges;  cautious in outlook
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  • The profit of the 3rd quarter was 265.64 billion T$ against 280.9 billion T$.
  • The income of the 3rd quarter increased by 36% year-on-year to 20.23 billion
  • Q4 revenue up 29% to $19.9-20.7 billion

TAIPEI, Oct 13 (Reuters) – Taiwanese chipmaker TSMC (2330.TW) It struck a more cautious note than ever on upcoming demand, citing challenges with rising inflationary costs and forecasting a chip slump next year, cutting its annual investment budget by at least 10% for 2022.

Speaking of the last set of US export control Aimed at slowing China’s advance in advanced chip manufacturing, TSMC CEO CC Wei said on Thursday it had received a one-year permit covering its factory in the Chinese city of Nanjing.

The new rules require companies that want to supply advanced equipment to Chinese chip makers to obtain a license from the US Commerce Department, although Washington reserve some foreign companies It operates in China.

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“Based on our initial reading and customer feedback, the new regulations set the control threshold at a very high-end specification, primarily used for artificial intelligence or supercomputing applications. Therefore, our initial assessment is that the impact on TSMC will be limited and manageable.” said Wei.

Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s largest contract chip maker, manufactures most of its chips in Taiwan.

After reporting an 80% jump in third-quarter profit, the strongest growth in two years, TSMC said it was more conservative in planning investments for 2023.

“We probably expect the semiconductor industry to decline in 2023, but TSMC is not immune either,” Wei told the media.

TSMC’s advantage in making the world’s most advanced chips for high-end customers like Apple Inc (AAPL.O) and Qualcomm Inc (QCOM.O) had protected it from the decline flagged by it chip manufacturers Including AMD (AMD.O) and Micron Technology Inc (MU).

The Taiwanese company’s comment on Thursday was more in line with industry concerns over decades of high inflation, rising interest rates and the COVID-19 lockdowns that have gripped the consumer electronics market in China.

INSTRUMENT DELAYS

TSMC, Asia’s most valuable listed company, has cut its capital expenditure (capex) to $36 billion for 2022. In July, the company said it would cut the lower end of its previous capex guidance to $40 billion to $44 billion this year, pushing some costs into next year due to delays in the delivery of some chipmaking equipment.

“About half of the change is due to capacity optimization based on the current mid-term outlook, and the other half is due to ongoing challenges with the delivery of tools,” Chief Financial Officer Wendell Huang said in a media call.

For the fourth quarter, TSMC forecasts a 29% increase in revenue to $19.9 billion to $20.7 billion, compared to $15.74 billion a year ago.

The company said its data center and automotive businesses remain stable for now, and its business overall will be stronger than others.

“We say 2023 is still a growth year for TSMC and the overall industry is likely to decline,” Wei said.

TSMC only in July he said it has been little affected by the current downturn in the sector, and long-term demand for its chips has been “solidly in place” thanks to businesses shopping for high-performance computing chips used in 5G networks and data centers. using chips in gadgets and vehicles.

Net profit for the third quarter ended in September rose to T$280.9 billion ($8.81 billion), compared with the T$265.64 billion average of 21 analyst estimates compiled by Refinitiv.

Revenue for the quarter rose 36% to $20.23 billion, from TSMC’s previous estimate of $19.8 billion to $20.6 billion. China accounted for just 8% of revenue in the third quarter, down from 13% in the second quarter.

Shares of TSMC are down almost 36% so far this year, giving it a market value of $323.7 billion. It fell 0.6%, compared with a 2.1% decline for the stock index on Thursday. (.TWII).

($1 = 31.8870 Taiwan dollars)

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Reporting by Ben Blanchard and Sarah Wu; Written by Sayantani Ghosh; Edited by Christian Schmollinger, Edmund Klamann, and Ana Nicolaci da Costa

Our standards: Thomson Reuters Trust Principles.

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