TSMC reports Q3 revenue down 14.6% YoY to ~$17.28B, net income down 24.9% YoY to ~$6.5B, and expects to spend $32B on growing and upgrading capacity in 2023
- Sales and capex projections both came in ahead of estimates — World's most advanced chipmaker is struggling with a downturn
Bloomberg
Context & Ripple Effects
TSMC entered 2023 after a quarter in which revenue and profit still rose sharply despite the industry downturn. By April, growth had slowed to 3.6% Q1 revenue growth and a 15% March sales decline, showing that weakening electronics demand was reaching the foundry leader.
The Q3 result makes that slowdown unmistakable, but the $32B 2023 spending plan preserves investment in expanded and upgraded production. Subsequent coverage points to a rebound: Q1 2024 revenue returned to double-digit growth after 2023’s decline.
First-order effects
TSMC absorbs a sharp year-over-year decline in sales and profit while maintaining a large 2023 capacity and technology-upgrade budget.
The spending commitment directs capital toward future manufacturing capability even as current customer demand is weak.
Second-order effects
Equipment and construction suppliers tied to TSMC’s expansion retain support from its capital program, rather than seeing investment fall in lockstep with the revenue downturn.
Customers and rival foundries must plan around a leading manufacturer that is continuing to upgrade capacity through a cyclical demand trough.
If this pattern holds, foundry competition will increasingly hinge on the ability to fund capacity and process upgrades during downturns, potentially widening the gap between scaled manufacturers and less-capitalized rivals.
The trend: This is a data point in the contracted semiconductor cycle, where demand swings quickly but leading-edge manufacturing investment must be committed years ahead.
$TSM vs $INTC - TSMC CEO saying they will outperform Intel's 18A with their N3P already: “Our internal assessment shows our N3P demonstrated comparable PPA to 18A competitors' technology but with an earlier time to market and much better cost. Our 2-nanometer technology without..…
$TSMC CEO: “The recent surge in AI-related demand supports our already strong conviction that demand for energy-efficient computing will accelerate in an intelligent and connected world. The value of our technology platform is expanding beyond the scope of geometry alone and... […
TSMC believes migration to N2 driven more by power efficiency. AI at the edge: starting to see silicon area grow again in ~5% range from new neural engines. Too early to discuss LT trajectory about if this silicon size accelerates, but that is the trend...
TSMC 3Q23 margins better on higher UTR (3nm yields?) + TWD FX. 4Q rev grow +11% QoQ USD, gross margin compression but operating margins not far off vs 3Q. Automotive saw major correction 3Q -24% QoQ on inventory adj but still see growth in 2024....
Arizona now 1100 employees 1H25 vol production, Japan at 800 2H24 vol prod, China Nanjing fab got BIS approval for continuation. Dresden Germany new fab is 22/28nm, construction beg 2H24 vol prod late 2027....
On semi industry, seeing early signs of rush orders as signs of inventory improvement. Thinks exit 2023 “healthier”, did not say healthy yet. Mgmt expects TSMC's 2024 will see ‘healthy growth’ but not ready to give # and not sure if we have past bottom alrdy but we are close....
TSMC did announce its 2023 third quarter earnings and here is the obligatory diagram of revenue by technology: 3 nm is showing up for the first time with 6 % auf TSMC's revenue. Revenue with 5 and 7 nm are both down by 7%. [image]
TSMC delivers double beat. CFO: “Moving into Q4 2023, we expect our business to be supported by the continued strong ramp of our 3-nanomenter technology, partially offset by customers' continued inventory adjustment.” $TSM $TSMC [image]
tldr TSMC is legitimately the only people who can do what they do on the entire planet for a LOT of deep reasons, especially how lithography is not turnkey, you need massive tuning and discipline and staff seniority and insane workforce to get anything to work at all
I asked for article/book recs to learn more about TSMC and got over 250 responses (!) The top recommendations were: • “Chip War” by @crmiller1: https://www.amazon.com/... • TSMC Deep Dive by @AcquiredFM: https://www.acquired.fm/... • TSMC Primer by @mariogabriele:...