TSMC is boosting sales outlook despite fears surrounding global demand
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The world’s largest contract maker of chips said on Thursday that annual revenues in dollar terms topped 20% -plus growth above previous estimates. Sales are expected to grow from $ 17.6 billion to $ 18.2 billion in the quarter ending June, indicating more than 30% growth. Analysts estimated the average at $ 16.9 billion, according to data compiled by Bloomberg.
The company estimates broader revenue margins for mobile phones, smart televisions and Apple Inc. And for other gadgets such as Samsung Electronics Co that keep customers informed of the persistent demand even if they exit the pandemic-era work-from-home arrangements. Meanwhile the chip shortage has not abated yet – the waiting time for semiconductor delivery in March has increased again due to China’s Kovid lockdowns and the earthquake that hit production in Japan, according to research by Susquehanna Financial Group.
The war in Ukraine, which is disrupting the world’s largest market for chips, and expectations that Chinese lockdowns are hurting gadget demand have dampened expectations.
TSMC will spend at least $ 40 billion to address the chip shortage
Strong vehicle sales will help boost this year as well – TSMC Chief Executive Officer CC Wei said in a conference call that demand for microcontrollers and car parts was strong. Automakers are still struggling to secure enough semiconductors, with Stellantis NV saying this week that chip shortages are at the same level as last year.
TSMC expects sales after sales, after deducting gross margin or production costs, to expand from 55.6% in the first quarter to 56% to 58% in the current quarter. It is the widest in at least a decade.
Net income for the three months to March rose to NT $ 202.7 billion ($ 7 billion), topping analysts’ average NT $ 186.1 billion. Revenue rose 36% to a record NT $ 491.1 billion, based on previously reported figures.
TSMC continued production in China, although many other factories ceased operations to combat the local pandemic. Chipmaker said in late March that it would restructure production priorities in China to cope with the change in demand due to Kovid restrictions.
What Bloomberg Intelligence Says:
TSMC’s inventory strategy on key materials such as silicon layers and industrial gases will be crucial in the briefing of 1Q results, as rising geopolitical tensions and slow global layer capacity gains cloud the supply picture.
– Charles Schum, Analyst
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The company reiterated that it has allocated $ 40 billion to $ 44 billion this year to expand and upgrade its facilities – a record expenditure intended to keep the company at the forefront of rapidly evolving technology and reduce future demand. However, analysts, including Credit Suisse’s Randy Abrams, warn that semiconductor sector growth could slow in the second half as higher interest rates, China’s cowid policies and rising commodity prices reduce spending on consumer electronics.
TSMC shares lost nearly 7% this year, with a broad decline in global technology stocks and China lockdowns affecting consumer demand, weight and supply chains. The stock changed slightly before the company report was published after the market closed.
(Updates with the comment made by the CEO in the fifth paragraph)
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