TSMC cuts 2023 capex after record Q4 as chip demand weakens

  • Q4 profit T$295.9 bln vs T$289.44 bln analyst outlook
  • Fourth quarter revenue grew 26.7% to $19.93 billion
  • 2023 sees capex $32-36 bln vs $36.3 bln year ago
  • The company plans to increase production overseas

TAIPEI, Jan 12 (Reuters) – Taiwanese chipmaker TSMC (2330.TW) warned on Thursday first-quarter revenue would fall 5% and it would scale back annual investments as key Apple Inc (AAPL.O) supplier Softening is expected. Demand due to slow global economy.

The bearish outlook comes after forecasting a 78% jump in fourth-quarter profits, underscoring the depth of a sharp downturn in the global technology sector, which has been hit by decades of high inflation rates, rising interest rates and a worsening consumer demand. grappling with. financial crisis.

Still, Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s most valuable chipmaker, forecasts growth will return in the second half of this year.

“We anticipate the semiconductor cycle to ease sometime in the first half and see a recovery in the second half of 2023,” CEO CC Wei said.

The world’s largest contract chipmaker said its capex would drop from $36.3 billion in 2022 to $32-36 billion in 2023.

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US-listed shares of TSMC rose 7.5% on hopes of a recovery in the second half of the year and capex cuts to manage supplies.

First half revenue declined by mid to high single-digit percentages. Revenue in the first quarter is expected to be in the range of $16.7 billion to $17.5 billion, compared with $17.57 billion a year ago.

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TSMC’s dominance in making some of the most advanced chips for high-end customers has saved it from recession. But the company is likely to be the victim of a deep slump, with sales expected to decline for the first time in four years in the current quarter.

Chief financial officer Wendell Huang said at a briefing the “fourth quarter” was weighed down by softening end-market demand and customer inventory adjustments, adding that such conditions would continue into the first quarter.

“Given near-term uncertainties, we continue to prudently manage our business and tighten capital expenditures where appropriate,” Huang said. “Our disciplined capex and capacity plan is based on long-term market demand profile.”

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Asia’s most valuable listed firm TSMC, backed by billionaire Warren Buffett’s investment group Berkshire Hathaway Inc (BRKa.N), has repeatedly said the business will benefit from a “mega-trend” of demand for high-performance computing chips for 5G. Will keep getting The increasing use of chips in networks and data centers, as well as in gadgets and vehicles.

It reiterated on Thursday that slow demand was a cyclical issue and overall 2023 would be a modest growth year for the company.

TSMC said it plans to increase production outside Taiwan as global attention turns to its investment plan and various governments offer incentives to boost chip manufacturing in their countries.

It said at least a fifth of its 28 nanometer (nm) and more advanced node capacity, which accounts for most of the company’s revenue in 2022, could go overseas “within five years or more”.

TSMC started building a second chip factory in Arizona late last year that will begin production in 2026 using the advanced 3nm. Its total investment in the US project is $40 billion.

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CEO Wei said TSMC was considering building a second fab in Japan, and it was also evaluating the possibility of building a specialized fab focused on the auto industry in Europe, without providing further details.

He said the company expects the auto chip shortage to be “quickly eased”.

For October-December, TSMC posted a record net profit of T$295.9 billion ($9.72 billion), up from T$166.2 billion a year earlier. This compared to the T$289.44 billion average of 21 analyst estimates compiled by Refinitiv.

Revenue rose 26.7% to $19.93 billion, compared with TSMC’s previously estimated range of $19.9 billion to $20.7 billion.

TSMC’s share price fell 27.1% in 2022 but is up 8.5% so far this year, giving the firm a market value of $412.78 billion. Shares rose 0.4% for the benchmark index (.TWII), compared with a 0.1% decline on Thursday.

($1 = 30.4420 Taiwan dollars)

Reporting by Yimou Li and Sarah Wu; Writing by Ben Blanchard; Editing by Christopher Cushing and Conor Humphreys

Our Standards: The Thomson Reuters Trust Principles.

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