Taiwanese chip giant TSMC’s net income up 2% in Q1, warns of slowing sales

TSMC posted NT$508.6 billion in Q1 sales but warned revenues may drop further to around NT$462 billion in Q2

Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chip maker, saw its net profit rise 2.1% to NT$206.9 billion in the first quarter from NT202.7 billion a year earlier but the firm warned that sales will continue to slow down in the second quarter.

Apple’s major chip TSMC also reported increased consolidated revenues last quarter at NT$508.6 billion, up 3.6% year on year according to its latest financial results on Thursday.

The impact of a waning global demand for tech was more evident on a quarter on quarter basis. TSMC’s net profit last quarter plummeted 30% from its NT$295.9 billion bottom line logged in the fourth quarter of 2022, dragged by an 18.7% drop in net sales during the same comparable period.

“Our first quarter business was impacted by weakening macroeconomic conditions and softening end market demand, which led customers to adjust their demand accordingly” Wendell Huang, vice president and chief financial officer of TSMC, said in a statement. “Moving into second quarter 2023, we expect our business to continue to be impacted by customers’ further inventory adjustment.”

The chip giant estimated its revenues to dip to as low as US$15.2 billion (around NT$462.1 billion) in the second quarter, while operating profit margin is expected to range between 39.5% and 41.5%.

In an earnings call, TSMC chief executive C. C. Wei projected a 10% year-on-year decline in revenues for the first half of the year.

“TSMC's business in the second half of this year is expected to be stronger than the first half, supported by customers' new product launches,” Wei said.

Shares at TSMC went up 1% and ended at NT$515 apiece on Thursday following a better-than-expected earnings report.