TSMC's 2Q23 revenue reached NT$480.8 billion, close to the high end of forecast

Due to ongoing order adjustments from multiple clients, including MediaTek, TSMC's revenue in June 2023 was NT$1564.04 billion (approx. US$49.82 billion), a decrease of 11.4% compared to May. It also dropped 11.1% compared to the same period in 2022. The second-quarter revenue was NT$4808.41 billion, a decrease of 5.46% compared to the previous quarter. The accumulated revenue for the first half of the year was approximately NT$9894.74 billion, slightly down 3.5% compared to the same period in 2022, but still the second-highest for the same period in history.

During TSMC's April earnings call, it was anticipated that due to continuous inventory adjustments by clients, the second-quarter revenue would drop to approximately US$15.2 billion to US$16 billion, a decrease of 4.3% to 9.09% from the first quarter's US$16.72 billion. Based on an exchange rate of NT$30.4 per US dollar, the revenue would be approximately NT$4620.8 billion to NT$4864 billion. From this perspective, TSMC's actual second-quarter revenue of NT$4808.41 billion performed close to the high end of the forecast.

TSMC will hold an online earnings call on July 20th to explain the second-quarter operating results and the outlook for the third quarter. The market currently has divergent views. On one hand, some are more optimistic, estimating that the second quarter will be the low point for the year. With the boost from Apple and Nvidia's new product shipments, the utilization rates of the 5/4 nm and 3 nm production capacities will increase quarter by quarter, leading to a more than 10% recovery in the third quarter's revenue. The full-year revenue is predicted to decline by at most around 6%, aligning with the forecasted revenue decline of 1-6% for the whole year.

However, another viewpoint suggests that continuous order reductions from major clients like MediaTek may lead to lower-than-expected new orders, and TSMC may have to announce further downward revisions. The decline in full-year revenue may expand to 10%.

In addition to explaining the third-quarter and full-year operating outlook during the earnings call, TSMC has already disclosed that its capital expenditure will be close to the lower end of US$32 billion. Other focus areas include progress on the 3/2 nm advanced process development, advanced packaging orders and capacity expansion, as well as the latest updates on overseas expansion, particularly the construction of the German fab and the progress delay in the United States. Moreover, the semiconductor inventory digestion, demand recovery, and growth momentum from generative AI are also areas of focus.

Although the semiconductor market's recovery in the second half of the year remains uncertain, TSMC Chairman Mark Liu is confident about 2024. During the June shareholders' meeting, he stated that as customer inventories gradually decrease and demand in certain end markets gradually recovers, there may be a slight decline in revenue in 2023, but the company is prepared to embrace the next wave of growth starting in 2024.

Source: TSMC