Earnings Report Preview | Taiwan Semiconductor Q4 Profit May Plummet 23%, Key Focus on Demand Outlook
Taiwan Semiconductor is set to announce its full-year performance for the fourth quarter on Thursday, with analysts predicting a 23% decline in Q4 profits. Analysts believe that the rebound in demand will drive growth this year. Taiwan Semiconductor had a strong performance in 2022, mainly driven by increased orders from customers such as Apple and NVIDIA. Although global semiconductor demand started to weaken in the second half of 2022, analysts expect an increase in demand for replenishing inventory by smartphone and computer manufacturers. Analysts at Fubon Securities express concerns about the outlook for Taiwan Semiconductor in the first quarter, but believe that demand from Apple will remain stable. Analysts at KGI Securities forecast a year-on-year revenue growth of around 20%, primarily driven by the recovery in demand for 5G and high-performance computing applications.
Zhitong App has learned that Taiwan Semiconductor (TSM.US) will announce its complete performance for the fourth quarter on Thursday. Analysts expect a 23% decline in Q4 profits, but they anticipate better growth this year against the backdrop of a demand rebound. The potential profit decline also reflects the company's strong performance in 2022, when its customers experienced robust demand growth after the pandemic, including significant orders from Apple (AAPL.US) and NVIDIA.
According to a survey by LSEG SmartEstimate of 20 analysts, Taiwan Semiconductor's net profit for the fourth quarter is projected to be TWD 226.4 billion (approximately USD 7.21 billion), marking its third consecutive quarter of profit decline. In the same period last year, the net profit was TWD 295.9 billion. Based on preliminary data released by Taiwan Semiconductor last week, the revenue for the fourth quarter of 2023 is estimated to be TWD 625.5 billion (approximately USD 20.1 billion), surpassing both the company's and the market's expectations.
Global demand for semiconductors began to weaken in the second half of 2022, but analysts believe that the reduction in inventory by smartphone and computer manufacturers will lead to an increase in demand for replenishing stock. Therefore, the focus of Thursday's release will mainly be on Taiwan Semiconductor's performance outlook for this year.
Analysts at Fubon Securities previously expressed concerns about Taiwan Semiconductor's prospects for the first quarter, but they now believe that the demand for Apple wafers will "remain stable in the short term." The analysts stated, "Although the market generally expects a seasonal slowdown in the first quarter, we have not seen further reduction in orders."
Analysts at KGI Securities expect first-quarter sales to exceed typical seasonal performance during the slow season, with year-on-year revenue growth of around 20% driven by the recovery in demand for 5G and high-performance computing applications. Last year, the boom in artificial intelligence drove the company's stock price up, and Taiwan Semiconductor's stock listed in Taipei, China, soared by 32% in 2023.