Taiwan Semiconductor Manufacturing Co.’s (TSMC) third-quarter revenue of $19.4 billion exceeded experts’ predictions. On Friday, the business disclosed that Q3 2022 earnings were 48% greater than they had been in the corresponding quarter the previous year.
According to a Bloomberg study, TSMC’s revenue for the months of July (NT$186.76 billion), August (NT$218.13 billion), and September (NT$208.25 billion) combined to total NT$613.14 billion ($19.382 billion), which is nearly 48% more than in Q3 2021. The performance of TSMC differs from that of other semiconductor firms. AMD recently issued a $1.1 billion sales warning while Intel Corporation and NVIDIA also faced a noticeable decline in income.
There are a number of reasons why TSMC’s performance is advancing while partner product sales are declining as a result of growing inflation and geopolitical unrest. First off, TSMC has been successful in growing its market share recently, especially when it comes to cutting-edge nodes. Second, because it outperforms other contract chip producers, the business is able to raise pricing, which boosts its revenue.
For TSMC, the third quarter of 2022 was very prosperous as the chip contract manufacturer increased the production of several high-profile items from its major clients. In particular, TSMC increased production of AMD’s most recent Zen 4-based desktop and server CPUs and apparently began producing the firm’s next GPUs using the RDNA 3 architecture.
The foundry also expanded the output of Apple’s A15 Bionic and A16 Bionic SoCs for smartphones as well as M2 system-on-chips for PCs. Finally, TSMC began producing Hopper GH100 compute GPUs and Nvidia’s Ada Lovelace graphics processors. All of these devices utilize pricey leading-edge nodes which explain how TSMC was able to increase its profits even as consumer chip demand is declining.
Although TSMC now has a larger market share than it did just a few years ago, Bloomberg reports that the company’s capitalization dropped 29% this year due to investors’ concerns about a potential revenue decline in the months to come as fabless chip designers cut their orders in response to declining demand. Investors’ worries about TSMC are further heightened by the company’s investments in new facilities in Taiwan and abroad . According to Morgan Stanley experts, the second half of 2023 will see a rise in chip demand once more. Investors are nonetheless concerned about the company’s profitability even though TSMC’s additional production capacity has not yet started operating.
A decline in TSMC’s revenue was anticipated by several experts based on the partners’ economic reports. However, the report now reveals that things have changed and the business has produced surplus income, which is encouraging for the future.