Taiwan Semiconductor Manufacturing Co. (TSMC) revenue for the fourth quarter of 2023 exceeded preliminary expectations, which provided for a decrease in this indicator.
The financial result of the mentioned company’s activities received some kind of support from representatives of the sphere of artificial intelligence, who provided an acceptable level of demand for chips. Orders received by TSMC from the AI industry helped offset weak demand for microcircuits for smartphones and laptops.
The company, which is based in Hsinchu, Taiwan, and is the main manufacturer of chips for Apple and Nvidia, sold products worth a total of NZ$176.3 billion (US$5.7 billion) in December. For the fourth quarter of 2023, TSMC generated revenue of NZ$625.5 billion. This indicator corresponds to the result for the same period in 2022. Analysts’ forecasts turned out to be more pessimistic than the real result. Experts expected TSMC to generate revenue of NZ$616.2 billion between October and December. It is worth noting that the revenue of the Taiwan-based manufacturer for the fourth quarter of 2022 was one of the best in its history.
Over the past year, TSMC has reduced its capital expenditure plans. This decision was made against the background of the electronics industry facing a glut of unsold inventory. TSMC reported that in the summer of 2023, a kind of peak in the decline in demand for chips was reached, after which consumer interest in the corresponding products should begin to recover. Also, the manufacturer, based in Taiwan, expects that sales growth of microcircuits will become the dominant trend this year.
The total revenue of the main chip manufacturer for Apple and Nvidia, of 2023 was fixed at 2.16 trillion New Zealand dollars. This figure is 4.5% lower than the result for 2022.
At the same time, it is worth noting that the positive financial dynamic of TSMC in the fourth quarter of 2023 is not a prerequisite for an unambiguous positive forecast for the current year. Sales volumes of this manufacturer in December decreased by 8.4% compared to the results for the same period in 2022. The overall financial performance for the fourth quarter of 2023 turned out to be positive, but the report for the last month of yesteryear to some extent overshadows this achievement of TSMC and casts doubt on the growth prospects in 2024.
The company’s executives, including Chief Executive C.C. Wei, expect their business to be in a zone of the dynamic of recovery this year after a difficult period. TSMC also recorded an improvement in its performance in the sphere of cloud computing, due to the high demand for artificial intelligence chips from Nvidia and Advanced Micro Devices.
This week, Samsung Electronics, another major manufacturer of microcircuits, reported a decline in operating profit for the sixth consecutive quarter. At the same time, a report from the Semiconductor Industry Association indicates that global chip sales showed growth in November for the first time since August 2022. These data indicate that there are prospects for the recovery of the market for the corresponding products in the current year.
HSBC analysts Ricky Seo and Hankil Chang say that updating server farms with artificial intelligence and apps based on this advanced technology is likely to be the driving force behind a new IT replacement cycle. According to experts, the capital expenditures of American cloud service providers in 2024 will grow by about 65% year-on-year. Analysts also assume that in the investment structure of the specified providers, the share of financing the acquisition of artificial intelligence servers will be 57%. In 2022, this figure was 8%.
This year, TSMC’s financial performance may be affected by the difficulties faced by one of its most important customers, Apple. The latest generation of the company’s smartphone called the iPhone 15, has become something that somewhat fits the definition of a disappointing debut. Sales of the new device in the Chinese market do not match the initial optimistic expectations. Jefferies analysts said this week that demand for the iPhone 15 in China is likely to worsen the current year. In this Asian country, Apple also faced such a problem as restricting the use of its smartphones by employees of state organizations and government-supported companies in the workplace. The relevant practice may be scaled up.